Healthy Skepticism Library item: 8943

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Publication type: news

Rauber C.
Startup to challenge IT health-care Goliaths
San Francisco Business Times 2007 Jan 5
http://charlotte.bizjournals.com/sanfrancisco/stories/2007/01/08/story5.html

Full text:

A San Francisco health-care IT startup with less than $1 million in initial funding threatens to upset a lot of high-tech applecarts.

The little-known startup, Practice Fusion Inc., has created an online electronic medical record system that sources say could ultimately compete with much-larger vendors like IDX (now part of GE) and Epic Systems Corp., the EMR provider for giants like Kaiser Permanente and Sutter Health.

Starting in February, it will be available free to physicians and medical practices through their independent practice associations, medical groups or health plans.

The company subsidized the free service through the sale of patient data, while protecting the patient’s identity, to customers such as insurers, pharmaceutical companies and clinical researchers. The company also will make money through targeted messaging, such as pharmaceutical ads, Centers for Disease Control announcements, and product recall information.

Instant access
Unlike electronic medical record systems, such as Epic’s, which is costing Kaiser billions of dollars and Sutter hundreds of millions over many years, the Practice Fusion model will supply hosted online applications almost instantly. It uses a web-based approach similar to Salesforce.com in the customer-relationship management arena. There’s no software to license, hardware to buy, or consultants to pay.

“We’re pretty excited about it,” said Jim Rodriguez, CEO of San Francisco-based Physicians Integrated Medical Group, Practice Fusion’s first customer. The 500-doctor IPA, which also represents doctors on the Peninsula, and in Marin County and the East Bay, expects to roll out the service to its members beginning next month, he said, primarily so its doctors and the hospitals where they practice can take advantage of filing claims online.

Sand Hill Road interest
So far, capital has come from private investors, many of whom are on its advisory board, said founder and CEO Ryan Howard. Howard previously worked as a Health Insurance Portability and Accountability Act implementation consultant for San Francisco’s Brown & Toland Medical Group and as director of product management and engineering for Saqqara Systems Inc. Privately held Practice Fusion is in the midst of an institutional financing round, Howard said.

Another source familiar with the company said interest is growing and there’s been “a lot of coming and going” along I-280 between San Francisco and various venture capital firms on Palo Alto’s Sand Hill Road.

“I think they’ve got it,” said Jonathan Gerber, one of the company’s investors and CEO of Physician Services Inc., an Escondido-based health-care practice management, billing and collections, and consulting firm.

Gerber, who also sits on the company’s advisory board, predicted that independent practice associations and health plans, in particular, will benefit from the Practice Fusion approach, adding that “the data mining capabilities would be just phenomenal.” (Gerber’s firm is also in negotiations to provide billing services for Practice Fusion’s clients.)

PIMG signed up for the service in late August, but had to wait for implementation until beta testing of the online service was complete, said Howard.

“We are essentially working out operational items (scaling and support) since the communities we are deploying to are so large,” he said in a Jan. 2 email. “We refuse to have the problems of a Friendster, where there were so many users that the system screeched to a halt.”

crauber@bizjournals.com / (415) 288-4946