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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