Practice Fusion Bids for Dominance in the Doctor’s Office with a Free, Ad-Supported Electronic Health Record System
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come along with a GrandCentral-like platform to handle data interchange between doctors’ offices, labs, pharmacies, and payers, and equip it with a simple Salesforce-style management interface, it could get very big, Howard reasoned.
Getting from there to here, however, has been enormously complex. “Innovating in this space is twice as hard, costs twice as much, and takes twice as long as you think it will,” Howard says.
On the technology side, Practice Fusion had to build a system that would allow doctors to get started almost instantly, that would talk to dozens of outside computer systems, and would be utterly secure and reliable. To accomplish all that, Howard brought in Matthew Douglass, a software engineer with experience in the energy and financial industries, as vice president of engineering. Douglass chose to build the Practice Fusion system on Adobe’s Flex framework, which is compatible with mobile devices as well as desktop Web browsers, and assembled a team of more than 25 engineers and product developers to build out its features.
On the business side, the company had to build relationships with scores of entities across the healthcare landscape before it could start sharing data. “You can’t just go build an e-prescribing system,” Howard says. With each pharmacy chain, lab, or other benefit provider, he says, “It’s a six-month engagement just to get the contract, then another year to get it integrated.”
And on the investment side, Howard had to line up backers gutsy (or rash) enough to believe in the possibility of serious advances in practice management. Early seed investors included the Silicon Valley-based investing group Band of Angels and former Intuit executives David Wu and Mark Goines. Morgenthaler Ventures, Aydin Senkut’s Felicis Ventures, and Salesforce.com joined in for the startup’s $5 million Series A round in January 2010.
Rebecca Lynn, a partner at Morgenthaler, says Practice Fusion fit a personal vision she’d long been nurturing for a revolution in “consumer-driven healthcare.” “I’d talked to hundreds of companies ,and most of them weren’t quite ready,” she says. “But when I found [Practice Fusion] they already had pretty significant traction, with 1,400 active users. They were just taking off, and I thought they had the right vision and the right team.”
Lynn says she was an early believer that Practice Fusion should lower its price to zero. “It has to be free because they are targeting doctors in small practices, who are the most financially constrained,” she says. Goines, who happened to be visiting Practice Fusion when I was there interviewing Howard, says he agreed. And he points out a further advantage of the company’s advertising-driven model: the ability to show doctors ads related to their patients’ conditions. Such targeted ads are typically more lucrative than standard-issue Web banners.
Imagine that a physician is reviewing the records of a patient with high cholesterol. By analyzing anonymized, “de-identified” patient data, Practice Fusion can learn about the condition, and can put an ad for a statin drug on the same page. “The reason I was so excited about the product is that it just makes the physician’s job easier, and part of that is delivering new information about drugs they may not have heard about before,” says Goines. “That’s something they need to do anyway, and … Next Page »