Freenomics and Healthcare IT


Electronic medical record (EMR) adoption has remained frustratingly low, despite numerous studies 
showing improvement in health care delivery resulting from EMR use, measured in many different ways (quality, consistency, cost, etc).

The Obama administration has proposed widespread, even universal, EMR implementation over the next 5 years, though how to accomplish it remains to be seen. The Medicare reimbursement “bump” given to physicians this year to use electronic prescribing is a step in this direction, trying to create incentives.

The biggest barrier to EMR adoption has been cost. Traditionally, EMRs
have been very expensive systems designed to be installed and run
locally in a medical office, or some other local network. Thus, in
addition to the cost of the software itself, they are predicated on the
need to have an entire server system and technical support available to
the practice. The business model used by these traditional EMR vendors
has been to expect the physicians themselves to pay for these systems.

Typically an EMR involves start-up costs (thousands or even tens of thousands of dollars per physician), maintenance costs (both of the software and of the underlying server system), upgrade costs, and add-on customized features for additional cost. The result can be an outlay of tens or even hundreds of thousands of dollars to a practice. Sometimes there is financing available (though the credit markets are tight right now), and sometimes local hospitals help underwrite the costs. Not surprisingly, EMR systems have had poor adoption by physicians, and are mostly seen in larger groups or staff-model clinics, or in networks closely affiliated with a local cost-underwriting hospital, and are seen much more rarely in small practices. The new administration has talked about earmarking significant monies to help physicians embrace EMRs, but exactly what this means is as-yet uncertain.

The Practice Fusion approach

Recognizing the importance of EMR adoption, and the challenges in adoption resulting from the business models thus far used, we created an EMR  designed to challenge the basic paradigms of the industry – Practice Fusion. Like with every other full EMR, ours aims to be robust, intuitive, well-designed and able to help physicians move through their workday without slowing anyone down. That is a given for everyone. However, uniquely, the Practice Fusion vision goes further: (1) the data should be hosted, rather than locally installed, so that appropriate and secure clinical data sharing between practitioners taking care of patients becomes easy; and (2) the business model of Freenomics is implemented so that the EMR is free to physician end-users, paid for by other revenue streams.

Freenomics is a term coined in Silicon Valley to describe a free web service paid for by other revenue sources (usually advertising) – Google searches, Yahoo mail, Wiki lookups, YouTube videos are all examples of free services paid for by other revenue sources. Applying this business model to EMRs is groundbreaking. An ad-based EMR that maintains a robust, professional, full-featured offering challenges how we think of the EMR business.

Recognizing the potential for hesitation by physicians using an ad-based model, Practice Fusion allows physicians to opt out and use an ad-free version for a nominal $100/month. This enables a large group to make a rapid decision to implement an EMR across the community without any financial burden, and if an individual physician wants to opt out, the group will know that the price point is negligible.

However, advertising to physicians is a ubiquitous “wind” and physicians have become quite accustomed to it – from in-office detail reps, to pens and notepaper with logos on them, to a myriad of free print journals that contain some modest content and jam-packed advertising. In addition to ads from traditional advertisers (like pharma), ads from service-partners, like billing services, or transcription services, or document scanning services, have also been well received.

An ad server – a sophisticated technology able to populate an ad window with very customized content – can be used in some innovative ways. A public county clinic network, for example, which might have a written policy against any pharmaceutical or device advertising, can utilize the ad service to broadcast its own messages bulletin-board-like to its specific community of clinics and doctors. The potential for organizations who wish to sign-up whole networks of doctors (e.g. IPAs, medical groups, or insurance plans) can use the ad server to render their own custom messages to targeted physicians. The potential is tremendous.

The bottom line is that the traditional model whereby physicians foot the entire bill of an EMR themselves needs to be re-thought – it hasn’t worked! EMR adoption using this approach has been frustratingly low. By contrast, drawing from a business model that has been highly successful in other industries (Freenomics), one can design a business that delivers a web-based, hosted, fully robust EMR to physicians free of charge to them, paid for by alternative revenue streams. The Practice Fusion experience has been a testament to the success of this approach. Further, the impact of this approach in the EMR field must be taken into account when designing EMR-support policy coming from the federal level, as envisioned by the new administration.

Robert Rowley is Chief Medical Officer at Practice Fusion, a San Francisco based company.

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20 replies »

  1. HealthFusion was established in 1998, and originally was a clearinghouse for medical billing, eventually adding practice management software. HealthFusion now offers an iPad-native, all-in-one, cloud-based Electronic Health Record (EHR) — MediTouch EHR.

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  3. All,
    Interesting thread – not sure how I missed this conversation earlier. I was an early critic of Practice Fusion when I first heard of their business model:
    However, I have come around for many of the reasons that Dr. Rowley and Dr. Kibbe mention. In fact, I would suspect that I am the only commenter on this section that has actually used the software in to take care of patients (Crossover Health personal health advisory service). Getting a tool (an EMR) into the hands of providers (much better than paper) who can use it to improve patient care is a good thing. The fact that the tool comes with some branded messaging is tolerated because the price (free) and the ease of use is so compelling (installed in minutes).
    In terms of software, I have found the features/functionality of the software to be sufficient for now, the look and feel to adequate, and the rate of ongoing development to be intriguing (several key updates over last several months). There are definitely some holes that need to be plugged, some functionality that needs to be added, but overall I find it from an EMR perspective to be “good enough”.
    In terms of business model, the adware component is irritating. They have flashing ads for vendors, devices, drugs, and non-medical things like mortgages. I consider all of this “collateral damage” and just completely tune it out. I never have and never plan to click on any of the ads and just mentally block them out. Again, if this is the way to help “subsidize” my use, then I tolerate it voluntarily. If it becomes too distasteful, than I can pony up $250 per month to have no ads. I know this going in and accept it at face value.
    In terms of ethics, come on man. Do you think I am going to start prescribing something because of an ad that I am ignoring? The detail people are much more influential because they develop a personal relationship, buy you food, and provide peer reviewed studies that can alter your decision making. I just don’t see that same type of connection or influence from impersonal ads that I am ignoring anyway.
    In conclusion, Practice Fusion represents a Disruptive Innovation for the following reasons:
    1. New business model – Dr. Rowley called it Freenomics but it is most appropriately called a “Fremium” model whereby the product is free to most people because it is paid for by a few (ad sponsors or paid users).
    2. Technology Enabler – Software as a Service (SaaS), remote training, and shortened development lifecycle
    3. Value Added Network – Practice Fusions ultimate success will depend upon the value added partners (billing companies, ad sponsors, etc) that they can bring into the ecosystem which ultimately increase the value of their offering which increases even more as more users adopt the service.
    By definition a Disruptive Innovation is not for everyone. They are smart to begin targeting non-consumers (physicians not using an EMR for whatever reason – cost, time, lazy, etc) who benefit from their “good enough” product. Over time, as they have already demonstrated, it will continue to compete and probably ultimately challenge some of the competitors in the EMR space.
    My only advice to the company, as it ever has been, is to turn down the PR machine with all the wild claims about them leading the HIT market, suspect adoption numbers, and the like which diminish their credibility. Just go heads down, continue to increase the numbers, and pop up one day with 250,000 users and everyone scratching their heads saying, “Where did that come from?”.
    Lets see how far they can go.

  4. This is what disturbs me about this model; do you want a company that focuses its technologies on delivering ads or on creating a truly usable EMR? One can’t help but think that behind closed doors there is more talk about how to increase ad revenue than how to solve the Doctors problems. I would prefer to work with a company that wants to get to know my business and helps me understand how to do it better than one that just wants to sell me something in a call-out box…

  5. Dr Rowley,
    I found your article quite interesting, interesting enough for me to spend a few minutes signing up for the service to see what it was all about.
    Can you please explain how you get to your number of 13,000 subscribers? Although I have little intention of using the service and certainly have not used it yet, do I count as a provider on your platform? Reading some other literature on your site and running some quick math it appears that you are being quite liberal in your counting of subscribers. Can you elaborate on the trigger to count someone as a true subscriber and, as importantly, how you remove someone from that list?

  6. Many of the comments on this thread have been quite good. In particular, David Kibbe asks many of the central questions on all of our minds with respect to this approach to deploying EMRs. And I certainly understand the dire circumstances faced by primary care physicians, and the dangerous attrition in the primary care workforce that results from this – I am a practicing primary care physician (Family Practice) in a region with high managed-care presence, and have seen the challenge posed by the expense of EMR adoption. Wearing another hat, I have also served as a medical director of a large regional IPA, and have been involved with attempts at EMR implementation using traditional client/server systems more broadly. Like many, I have been frustrated at the difficulty in achieving widespread EMR adoption, largely due to cost (as well as other factors). As a result, I joined with others to try a wholly new approach: make it free to physicians, and find alternative ways for the company to incur revenue.
    The bottom line here is to remove barriers and achieve EMR adoption. The Practice Fusion experience has been one of rapid growth (over 13,000 subscribers have joined so far), and supports the proposition that free-to-physicians is the best successful way toward widespread adoption. In particular, there has been significant adoption by small and solo practices, which is reassuring – this segment of the practice-size spectrum (which is the setting where > 60% of the U.S. physician workforce is found) has been the least likely to adopt EMRs historically, and the fact that there is significant headway with the free-to-physicians model here points to a way forward.
    We must recognize that the ad-server platform (which is what generates the revenues that allow the free-to-physicians EMR to be supported) is content-agnostic. It is merely a way of delivering focused messages to a targeted audience. The question of who “should” deliver ads has been discussed in this thread, and the ethical discussion of this is a good one to engage in. I tend to be a pragmatist here, and ask the question “who has stepped up to the table and supported this platform?” To date, commercial vendors, including service-partners (like billing services, transcription services, document scanning services, etc.), have come forward. The result? Thousands of physicians, previously priced out of the EMR market, have begun to adopt EMRs in their practices. This is a good thing.
    Should other entities – insurers, IPAs, government agencies, etc — step up to the plate also, and utilize the ad-server platform to allow a free EMR to be supported? Absolutely. I would encourage such organizations to step forward and explore with us ways to support the provision of free-to-physician EMRs. In my opinion, this is the only way to move toward the goal of widespread EMR use in U.S. healthcare. It is also a challenge to the EMR-vendor community to re-conceptualize their business models and learn from the “free EMR” experience.
    -Robert Rowley, MD

  7. Bev –
    I’m chiming in here, because I’m the editor responsible for making the call to run Dr. Rowley’s piece. You may disagree with his firm’s business model (and I’d certainly expect you to), but I think the goal is for THCb to be the forum where these issues are discussed.
    There are some good questions here for us all to think about – many of which Dr. Kibbe raised in his reply.
    How are physicians reacting to this offering? Equally importantly: how are pharma companies reacting? Are they participating? One might think they’d jump on the opportunity, but you may find they’re playing a game of wait and see. (Dr. Rawley – any input on companies that are participating would be useful.) Finally, are the trade offs involved – and there clearly are trade offs involved – worth it in the minds of users?
    I’ve experimented with software that uses this model more than once. And it’s always been a major turn off for me. I’m writer, so I’m pretty picky about what appears on my screen while I’m working. But, then again, I’m not a doctor. Many say that industry marketing materials don’t bother them. I’d be curious to hear what users who’ve tried Practice Fusion out have to say.
    – John Irvine

  8. Matthew;
    I know this is just a side issue, but compare this “commercial” to a doctor posting about a drug or medical device made by a company with which he has a relationship, paid or unpaid. Do we think that doctor will be as objective as one with no relationship? I don’t think so.
    I would rather have seen a post from a user. But – your blog, your call; no hard feelings!

  9. Bev. It’s not a commercial for two reasons. One, it’s Robert’s opinion about something that has been in the news a fair amount (and one for which we had him work on several rewrites) and two, we didn’t get paid!
    Of course, you are absolutely welcome to express your opinion about the validity of Practice Fusions model (which I too have several reservations about).

  10. I agree with 99% of this. A hosted system in a web-enabled Software as a Service model is the only way a small provider group is going to go to an EMR. athenahealth is on the right track here.
    I also think that asking the provider to pay for it might not be the best approach. But why ads making up the difference? Ethical issues abound and is it even realistic? If the ads work, that’s a problem almost in itself. When I go to a doctor using one of these systems, I’ll have even more questions about why I’m being prescribed what I’m being prescribed.
    Let the government and payors pay for it as a cost of doing business. At that point, it’s just a question of who’s best able to deliver service in their SaaS model.

  11. Here is an idea…Why don’t all of you declare yourselves 501(C) 6 organizations and claim your income as Tax Exempt. This is what Lieber does at HIMSS.org, the so called HIT leader. They’ve made over $100 million in the last 10 years and haven’t paid a dime in taxes.
    Some people go to medical school thinking they will become millionaires and really could care less about helping people, I feel badly for those who truly care about the patients and are having a hard time with it. But the reality is the other extreme, the guys that carry the cash out in big bags by putting on carnival like annual conferences declare the millions as tax exempt. Not only are they non medical people , many of them do not know what an electronic health record looks like. Ah…but they would tell us all what it is we are all supposed to have. The goal is to make more money for themselves and their special vendor interests, build an HIT Cartel and have us, the educated folks pay for all of it. We then enjoy the sublime pleasure of having ” a certified product”. This reminds me of what an Illinois Congressman said during the recent impeachment trial–Illinois bought underwear for the male prisoners at $14.00 per pair. I would ask that if we are required to have an electronic health record, does it, like the Illinois $14.00 underwear come with a fly sewn into the front and back of the shorts?
    Before we go passing the buck I think we have a crime wave that needs to be cleaned up. A simple pie chart will tell us who’s making lots of money on the backs of the sick.
    The disgusting part of this whole thing is Americans are paying protection money to a lot of uneducated thugs who have nothing to do with the delivery care. Rapid deployment of EHR’s is not going to change that. We need policy change , regulation and some good old fashioned law and order to get the mob off the backs of the people.

  12. endofline: This is so true. I don’t know why people keep ignoring this very stark reality: primary care physicians, particularly in small offices, but in large ones too, are increasingly unable to practice. I speak to primary care docs almost every day and in the last month or so, I’ve heard stories that should be of concern to anybody that is remotely interested in transforming healthcare. Doctors are shutting down established clinics and becoming hospitalists; others are considering selling and just moving on. The ones that stay are trying to restructure and salvage something. There are always those that do well, but these are fewer and fewer. Primary care is the backbone of any healthcare reform and we cannot just ignore this problem.
    Just yesterday, I spoke to a very nice person in a one doctor office and she said that there just isn’t any surplus income anymore, and if there is they must buy diagnostic machines so they can perform procedures in the office because that’s the only way to get paid.
    We can talk about EMRs as long as we want and I agree that they are important to healthcare reform, if they are usable, lightweight and all the good stuff that people mentioned here. However, we must address the reimbursement crunch experienced by primary care docs, who are supposed to provide medical homes and coordinated care, in order to have any impact on cost of care. The measly CMS incentives are not nearly enough and adoption of technology cannot change what Medicare pays for an office visit.

  13. Clearly innovative approaches such as ad-based services will be required to spur broad adoption of EHRs. Our surgical specialty practice has seen our EMR/PM overhead skyrocket during the implementation, maintenance and upgrade phases and despite the huge per provider cost we are LIGHTYEARS behind using the most important and cost-containing features.
    Frankly, with declining contractual reimbursement and recent lower procedural volume, this expense is a major concern and limiting factor for practice growth, including recruitment.
    The use of off-site data clearinghouses, protected data farms, and implementation of ‘cloud’ computing, and web-based applications are obvious means to tie together the vast array of fragmented systems. Unfortunately there are too many large EHR companies vying for our business with proprietary systems with no current motivation for ‘sharing’. This must come from us as physicians, driving the implementation of universal standards for data transfer and integration and mandatory adoption of ‘simple’ features such as lab and imaging integration and electronic information sharing. This would not necessarily preclude the large EMR companies from offering custom front-end applications, yet the ‘back-end’ hardware and data support can become standardized and centralized which would greatly cut these costs for the individual practices.
    Stephen J. Motew, MD, FACS, RVT
    Salem Surgical Associates, PA
    Winston-Salem, NC

  14. Electronic medical record (EMR) adoption has remained low, because numerous studies have also failed to show improvement in health care delivery resulting from EMR use, measured in many different ways (quality, consistency, cost, etc.)
    And the idea of having ads on an EHR screen while I’m seeing patients could only be hatched on Planet Silicon.

  15. Dear Robert and others: I commend the folks at Practice Fusion for entering this forum, which last time I looked was still an open and welcoming place for innovative thinking, products, and business models. The fact is that cost has consistently been a barrier to use of EMRs by physicians — not the only barrier, of course, but a significant one. It seems inevitable to me that someone would try out an ad-based EMR/EHR product at some time, and I’m very interested in the results of the experiment. Will physicians use the product? Will only physicians in very small medical practices use the product? How does the product integrate with the billing system in the office? Are there any large integrated delivery systems that are considering moving in this direction? Who are the advertisers? How satisfied are the advertisers? How do they measure their ROI? And so on.
    With kind regards, DCK

  16. I don’t know why people don’t get it. “Primary Care”, or better term, the non to low procedural specialties can’t afford to stay in business let alone buy an emr.
    This month, due to the economy, my patient flow went from 40 a day to 20 a day. I don’t make any money to take home until after I see that 3.25 patient in an hour. This month I won’t be able to pay myself anything and the practice will be in debt.
    I know that people don’t like the whining coming from primary care. I guess they should be happy since less and less of us can afford to provide care and when we are all gone you can be sure that the whining will go away.

  17. I would recommend Mitochon. Mitochon Systems also has an ad-supported low-cost medical EMR offering for doctors. Their website is http://www.mitochonsystems.com.
    Mitochon Systems connects physicians, patients, and hospitals into a Virtual Medical Community (VMC) that provides a secure platform for the exchange of healthcare information. Their products are called miEMR and miConnect.
    Check them out too.

  18. I’m not sure who “Health Fusion” is, but Practice Fusion is a company I have been working with whose centerpiece is its EMR – software designed to replace the use of paper charts by physicians in their practices.
    Multiple studies both in the medical literature as well as the health policy literature show cost as the largest barrier to EMR adoption by physicians. Disruption of workflows, transient decrease in productivity during the implementation phase, and simple resistance to change are also barriers, but the main one is cost.
    The posting here is simply to share our experience in using a novel business model – sometimes referred to as the “Silicon Valley business model” – in the healthcare field. It is a way of addressing the main barrier to EMR adoption. Our experience to date has been very rapid expansion of our user base.
    The assertion that “physicians are wealthy and should be able to afford EMRs” is not supported by experience. There is significant disparity between different specialties, with primary care being several-fold lower in income relative to others, and resulting is crisis-level attrition among the primary care workforce – this is a discussion that should occur on a different thread. What we have here is an approach that can be a potential solution to the low rate of EMR adoption in this country, which has been a focus of the Obama administration.
    Robert Rowley, MD
    Chief Medical Officer
    Practice Fusion, Inc.

  19. Health Fusion is a claims processing service not an EMR last time I checked. Since when did the health care blog start to post ads for companies? One who is on record as opposing having certifications for EMRs? I thought this was satire at first. I guess that providers are content to continue to wait on average 15 years to implement research and are comfortable not providing the standard of care 50% of the time.
    I find it incredible to believe that cost is the reason that doctors haven’t implemented this technology since the average specialist makes over $300,000 a year and . The reason that they haven’t been implemented is because the investment comes from the doc and the savings accrue to insurance companies. That is why closed systems like the VA and Kaiser were the first to adopt.
    Have the insurance companies pay for the technology and then perhaps you wouldn’t have to fill out 8 different forms to process a bill of have 1/3 of them rejected. Sadly financial software is almost always implemented before clinical applications since the goal is to make as much money as possible. Not to provide the highest quality most effective care.