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Medfusion Lands $3M for Patient-Focused Software Push

Xconomy Raleigh-Durham — 

There’s a lot of talk in the health IT space about getting patients actively engaged in health care, and a lot of companies are trying to do it through mobile apps. Medfusion, a health software company that already has a nationwide customer base of physicians, now wants to reach out to patients directly and the company has raised $3 million to accelerate that push.

Medfusion announced the new funding Tuesday, which the Cary, NC-based company says will help it move forward with its mobile strategy. The investment came from Bull City Venture Partners and Hatteras Venture Partners, two venture capital firms based in Durham, NC. Hatteras last week closed on $90 million for its fifth fund investing in life science and health IT companies.

Medfusion, founded in 2000, originally developed software to help physicians’ offices handle tasks such as appointments, lab results, online billing, and prescription refills. Serving physician practices is still Medfusion’s core business—the company claims this software now connects more than 11 million patients to their doctors. But CEO Vern Davenport says that, over the last year, the company has also been developing more patient-focused software.

These days, families are often juggling multiple physician relationships for family members. Davenport points to his own family as an example, where he tracks the physician contacts for his six children, as well as his elderly father who alone has more than eight doctors. The company developed an app called Medfusion Plus, which enables patients to view and manage patient records and physician relationships for the entire family on a single mobile device. The company plans to launch the app later this month.

Medfusion aims to reach consumers through the company’s already established relationships with physicians. Davenport says the company’s new patient-focused app will also be available for download from the Apple App Store and Google Play.

But Davenport sees additional opportunity in the healthcare industry changes that put greater emphasis on linking the reimbursement of care to metrics such as patient outcomes, as well as the ability to reduce costs. That emphasis opens the door to potential partnerships where Medfusion would provide data for a group of patients that a company in healthcare analytics or population health could crunch for a hospital system, Davenport explains. He adds that Medfusion could also partner with companies that have monitoring technologies that track heart rate and other vital signs. Medfusion could provide a way to merge that real time data with a patient’s historical records and share the combined information with a patient’s doctors.

“The technology pieces are there,” Davenport says. “What we’re now seeing is the convergence of this driven by the Internet of things, and consumer movement toward mobile.”

It’s the second time around for Medfusion to operate as a health IT startup. Intuit (NASDAQ: INTU) acquired Medfusion for $91 million in 2010 and made it a new division within the larger company called Intuit Health. Three years later, Medfusion founder Steve Malik bought the company back as Intuit refocused on its core financial software business. At the time, Malik said that he believed Medfusion could innovate better and faster as a smaller company than as a division within a larger one.

Malik stepped aside as Medfusion’s CEO last December but remained executive chairman. Davenport, who had held chief executive roles at electronic medical records company Misys Healthcare Systems and medical documentation firm M*Modal, was brought in as Malik’s successor. In connection with becoming Medfusion’s CEO, Davenport also led a $5 million round of financing for the company.