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Advertising, data sales subsidize EMR products

When you're out shopping for bargains, free is as good as it gets—except in healthcare information technology, where for many physicians, even free hasn't been good enough. Bucking that conventional wisdom, several developers of electronic medical-record systems have announced plans to offer free EMRs to office-based physicians. The costs for the systems will be subsidized by sales of dynamically linked advertisements on the EMR screens. One vendor says it plans to sell patient data as well.

The ad-driven approach is something of a mash-up of a couple of earlier ideas, subsidized EMRs delivered via the Web using the application service provider, or ASP, delivery model. Back in the dot-com heyday of the late 1990s and early 2000s, there were dozens of vendors of rudimentary clinical IT systems targeting physicians with systems that were either backed directly by pharmaceutical or insurance companies or by developers who sought to make money by chiefly serving the interests of drugmakers or payers. Many were ASP-based or offered physicians free personal digital assistants, such as Palm Pilots or Pocket PCs, loaded with electronic prescribing software systems. The handheld computers were synched periodically with the vendors' remote databases.

But the free systems also gathered data on a physician's prescribing habits, touted the sponsor's favored drugs or otherwise did their master's bidding. Most of those firms and their systems died when they failed to attract a threshold level of physician adoption or their venture capital ran out.

Several vendors have had some success pushing ASP-based practice management and billing systems, but until recently, physician resistance to having someone or something "out there" storing and controlling—and possibly data-mining—their clinical records has been substantial.

That's been so even though for the thousands of physicians in solo- or two- or three-doctor practices where a majority of patient-care physicians work, ASP-based systems make acquiring, upgrading and maintaining software systems easier and more affordable. Some IT observers say ASPs may be the only way that EMRs will ever be viable in these small offices.

According to several industry observers contacted for this story, physician reticence to embrace such products may be waning. Using ASP-based systems, at least a pair of vendors are offering the ultimate in low-cost EMRs—free systems—or at least free in the sense that the physician user pays nothing to install or operate them.

One vendor is Practice Fusion, a 2-year-old, San Francisco-based developer of ASP-based practice-management and EMR systems. In February, the company began offering both systems free of charge. A physician’s costs will be offset by Practice Fusion's sale of their patients' data (aggregated and de-identified, according to a company spokesman) and by advertising that would appear on a portion of their EMR computer screen.

In July, Practice Fusion announced it had acquired Medical ChartWizard Systems, a physician-led developer of practice-management and EMR systems. Since then, the companies have been combining their products into a single suite scheduled for release this month.

Sales Director Even Walser says Practice Fusion has about 1,000 physicians using the system, "and a couple of plans that are really interested" in buying the system and offering it to physicians.

Data and ad buyers can be pharmaceutical companies, plans and other businesses interested in communicating directly with physicians at work, Walser says. An ad position across the bottom of the entry page of the system will enable advertisers to use a graphic-rich horizontal banner, but, he says, once the EMR is loaded, text-only ads are all that will be allowed in the four stacked boxes on the right side of the physician's work screen.

Glenwood Systems, Waterbury, Conn., is another company touting a free electronic record. Nat Loganathan is president of Glenwood, which was founded in 1998 as "primarily a billing service company," he says. The company initially offered its practice-management software, and later, in 2003, an EMR system, GlaceEMR, as a boon to its billing-service customers.

"It was one of the main attractions for signing on to our billing service because the practice-management software and EMR were free," he says. In April, GlaceEMR received certification from the federally supported Certification Commission for Healthcare Information Technology. In July, the company began offering it free to nonbilling service customers.

For now, ad space on the EMR will be for "house ads" touting Glenwood Systems' billing service, he says, but the hope is to sell those ad spaces to advertisers when enough physicians sign up. The company now has 800 customers for its billing service, but less than 10% use the EMR, Loganathan says.

CCHIT is exerting a downward pressure on EMR prices, Loganathan says.

"When you make a claim that you're selling software for $70,000 and you say 'mine is superior' and there is another company that is selling it for $200 a month, that levels it for technical comparison," he says. "It's going to make it very difficult to justify those (higher) price levels."

Joseph Nassir, a physician in solo practice specializing in internal medicine in Huntington Beach, Calif., says he's been using Glenwood's EMR system since 2004, but "I won't call it free." After all, Nassir says, “They are charging me, technically, for billing.” Nassir says he hasn't seen the modified version of the EMR with the ad position on it, but he expressed ambivalence about the proposed intrusion on valuable EMR screen space.

"Any additional information will be somewhat intrusive," Nassir says. But if it is linked to information about potential new treatments or other clinically relevant items, "that will be a good thing."

Steven Waldren, director of the Center for Health Information Technology at the American Academy of Family Physicians, says the medical society hasn't taken a policy position on EMRs with advertising, but says he doubts that the ad market alone will provide enough revenue to support an EMR service. And that will likely prove problematic for many physicians.

"You'll need some other sort of business model," Waldren says, which could raise "political issues." For example, will the vendors seek additional funding by selling data to pharmaceutical companies? "You have my data and you have a business model with pharma. I think the docs will put those things together and say, 'Oh, you'll probably sell my data to pharma,' and that's where things become a little disconcerting."

Waldren says many physicians have objected to ASPs, saying they fear a loss of Internet connectivity would put them out of business. But the down time on an ASP-based system would probably be less than the more popular alternative, an EMR resident on a server linking a PC network maintained in a typical physician’s office.

"The real issue with the ASP model is, if the ASP company, for whatever reason, goes out of business and they flip your switch," Waldren says. "With a client-server, you at least have a couple of months to figure out your next move."

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