From The Editor | January 25, 2013

The Truth Behind "Free" EHRs

ken congdon

By Ken Congdon

Follow Me On Twitter @KenOnHIT

Everyone loves free stuff. There’s just something so intoxicating about receiving a product or service without having to shell out your hard-earned dollars in return. Doctors aren’t immune to this sensation. This is one of the reasons several “free” ambulatory EHR platforms have become so popular with physician practices — particularly independent practitioners. However, for this demographic, a free EHR can mean more than a sense of euphoria. In many cases, the ability to sidestep the often substantial upfront costs necessary to implement an EHR can keep a practice from shutting its doors or physicians from taking an early retirement.

That being said, EHR software is a multi-billion dollar market. How can a few vendors simply give an EHR system away when others charge thousands (even millions) of dollars per installation? Are free EHRs as robust as their cost-based counterparts? Are free platforms built for the long-haul? Most importantly — knowing that EHR software is a business, and businesses exist to make a profit — where does the money come from with a “free” EHR? Knowing the answers to these questions can help you make an informed decision when evaluating your EHR options.

Practice Fusion: Can Ads & Data Drive Sufficient Revenue?

Practice Fusion is the poster child when it comes to free EHR platforms. The company has received several rounds of funding from private investors and has been referred to in the media as “The Facebook of EHRs.” Heck, the platform has even been endorsed by Dr. Oz and featured on his nationally broadcast television program.

Practice Fusion targets small to midsize medical practices, and currently boasts more than 150,000 active users that leverage the platform to document the care of approximately 50 million patients. The physicians I spoke with seem genuinely pleased with the feature set, functionality, and usability of Practice Fusion’s web-based  EHR. Plus, Practice Fusion is currently working to enhance the capabilities of its product — connecting imaging systems, reporting systems, lab systems, and other applications to the platform — transforming it from a mere EMR to a comprehensive tool for physicians to manage their patients and their business.

Best of all, throughout its evolution, Practice Fusion has remained completely free for physicians to use. In fact, Practice Fusion executives attribute its free model as the primary reason for the company’s success. But how exactly is this success being gauged? To date, Practice Fusion’s growth has been funded almost exclusively by private investors. The company has yet to generate a return for its stakeholders, but clearly there’s something that these investors like about Practice Fusions revenue model. It’s something I’ve been unable to figure out, and it’s something the company seems a bit secretive about.

I recently spoke with Emily Peters, VP of Marketing Communications at Practice Fusion, and she basically reaffirmed the business model that is already widely known to the public — the company’s strategy is to generate revenue from advertising dollars. Essentially, a wide array of vendors — from pharmaceutical companies to software developers —pay to have their marketing messages displayed on the Practice Fusion user interface.

“Most physicians typically use our EHR platform for six to eight hours a day,” says Peters. “Advertisers find this to be an extremely attractive marketing vehicle because they know they are getting in front of a captive, and historically hard to reach, audience. Advertisers can even target their messages to reach physicians in specific specialties.”

While attractive to advertisers, Practice Fusion has been careful to ensure the marketing messages don’t disrupt physician workflows. The ads are fairly unintrusive. There are no pop-up ads, and the user interface isn’t overrun with banner ads. Instead, a single, almost understated, ad appears on the user interface, and this ad changes whenever the clinician navigates to a different EHR screen. See the image below for an example of an advertisement displayed on a Practice Fusion EHR screen.

Free EHR Dashboard Overview
Click to view larger.

The advertising-supported model has been effective for other web-based software applications (e.g. Skype, Pandora, etc.), but many question whether this approach alone is viable for an application as critical to business operations and patient care as an EHR. Advertising is a fickle business that can be greatly influenced by ebbs and flows in the economy. Do you really want the stability of your EHR to be determined by ad revenue?

Practice Fusion recognizes the potential limitations of the advertising supported model, and feels confident its business plan is well-rounded enough to ensure the consistent growth and development of its EHR platform. “Advertising is our primary revenue model,” says Peters. “It is not our only revenue model.”

When asked to expand on the other revenue models Practice Fusion employed, Peters gave the obligatory, “I can’t really comment on that” response. Since Practice Fusion has drawn so many comparisons to Facebook, many speculate that, like Facebook, the value of Practice Fusion to investors isn’t necessarily in the EHR platform, but in the data it ultimately collects.

For example, earlier this month, Facebook unveiled its new Graph Search feature. This tool basically allows the company to aggregate the personal information of its millions of users and customize results based on specific search criteria. For example, demonstrations of the tool have identified Facebook users that work for Mitt Romney that also “Like” President Obama, or married people that “Like” prostitutes. A more practical example would be to identify all people living in Chicago that also “Like” golf.

What if Practice Fusion could apply the same type of profiling power to the patient records stored in its web-based EHR? For example, what if it could identify all patients in a specific region, within a specific age range, with a specific chronic condition, and specific vital signs? What would this information be worth to the pharmaceutical industry? Some have speculated that this is Practice Fusion’s end game. However, Peters was quick to stress Practice Fusion’s commitment to ensuring PHI integrity.

“Practice Fusion has never and will never sell raw patient data,” says Peters. “The closest we’ve come is releasing a free data set for researchers around the country to access. However, this information was released in a HIPAA-compliant manner, and the research conducted using this data can actually enhance the public good.”

Hello Health Compels Patients To Ante Up

Like Practice Fusion, Hello Health is a “free” web-based EHR that targets small to midsize physicians practices. Not only does Hello Health allow physicians to use its platform free of charge, but the company even asserts that its platform can actually generate revenue for the physicians practice. How? Well, unlike Practice Fusion, Hello Health doesn’t rely on ad dollars. Instead, the company passes the expense of the technology onto the patient. Physicians that use the Hello Health platform are encouraged to get their patients to pay anywhere from $36 to $120 annually to support the technology investment and access the patient-facing features the platform offers. About one-third of this recurring revenue is then shared with the doctor’s office.

I must admit, I was a bit taken aback when I first heard about this model. My initial reaction was that this would go over like a lead balloon with most patients. Think about it. Doctors are widely perceived as being financially well off. Most patients feel they already pay a hefty sum for the services they receive from their physicians. Now, imagine that you’re sitting in your doctor’s office for a check-up and he or she asks you to fork over an extra $120 a year to support their EHR investment. What would keep you from laughing in their face?

This was my initial reaction. However, the more I thought about the model, the more it started to make sense to me. First of all, many patients are extremely loyal to their physicians. Trusted caregivers can be hard to find, and many folks may be more than willing to shell out an extra $120 a year to keep their current doctor, especially if the alternative would be to find a new one. Secondly, the added expense isn’t positioned as a cost with no benefit to the patient. To the contrary, individuals that support Hello Health enjoy several perks the general patient population does not.

“Patients that support Hello Health have access to online scheduling,” says Stephen Armstrong, Senior VP of Marketing at Hello Health. “Our physicians actually block out windows of time in their schedules strictly to accommodate appointments submitted online. This provides patients that support the platform with more options when it comes to scheduling. They have a higher likelihood of seeing the doctor at a desired time. Enrolled patients also have the ability to communicate directly with their physicians via email using the portal, which provides added peace of mind. We brand these perks concierge services.”

Additionally, patients that support Hello Health have access to premium services such as virtual visits. A virtual visit is basically a video conference between the physician and a patient using the Hello Health interface. These events are scheduled as needed, and patients are charged an additional $50 to $60 per 15-minute session to use this service. However, this option can be a desirable and cost-effective alternative for patients dealing with transportation or child care challenges and expenses.

One physician benefitting from Hello Health is Dr. Elizabeth Beautyman (feel free to read the full case study covering Dr. Beautyman’s use of Hello Health titled, Free EHR Proves Effective For Solo Practitioner). This New-York-based internist began using Hello Health in September 2011 as a replacement for paper charts. To date, between 300 and 400 of her patients provide paid support of the EHR platform, and although not required, Dr. Beautyman is considering making it mandatory for all her patients to enroll in Hello Health. The reason? She and her patients are finding tremendous value in the concierge services made available to Hello Health supporters.

“My patients value the direct connection they have to me without having to call our office and talk to one of my office staff,” says Dr. Beautyman. “Moreover, these online communications are encrypted and automatically included as part of the patient’s electronic health record. It’s a beautiful thing.”   

While the patient-supported model now makes sense to me, I still question its long term viability. Many of the concierge services offered by Hello Health may be cutting-edge enough for patients to pay for today, but they will likely become more commonplace as the industry evolves. Online scheduling and email correspondence capabilities are included in many other patient portal platforms that physicians are beginning to implement and offer their patients free of charge. Will patients be comfortable paying for the same services others may receive for free from competing physicians in the future? Will physician loyalty be enough to keep the recurring revenue flowing? Maybe. Particularly given the physician shortage we’re likely to experience as a result of healthcare reform. However, some patients may take the opportunity to shop around, and charging for convenience-based services could be a key differentiator.

Ensure An Even Playing Field For EHR Evaluation

This article is not meant to endorse or indict free ambulatory EHR platforms. I’m sure some free EHRs outperform paid EHRs in certain areas and vice versa. The point is to ensure you hold free EHRs and paid EHRs to the same standard. Some physicians feel they have less to lose with a free EHR platform. Since they don’t have any money tied up in the system, it’s not catastrophic if the EHR doesn’t pan out. This is flawed thinking. No provider wants to be in a position where it has to rip and replace its EHR system — regardless of whether the platform it was using was purchased or free. The consequences of this action can be far reaching and include wasted labor, decreased productivity, EHR downtime, missed incentive payments, and reimbursement penalties.

Common reasons why EHRs are replaced include poor usability/flexibility, vendor consolidation, and the inability of an existing platform to continue to meet Meaningful Use requirements. All of these factors must be taken into account when evaluating your EHR options. For example, keeping an EHR platform Meaningful Use certified is an expensive proposition that demands substantial R&D resources. You want to be comfortable that the vendor you choose has a solid business plan to see you through all stages of Meaningful Use while continuing to meet the needs of your practice. Ultimately, a free EHR may have a strong long-term business strategy and be the best choice for your practice. Just make sure you ask these vendors the same questions you would ask paid EHR vendors.