What’s in Store for Practice Fusion Users
Allscripts’ acquisition of Practice Fusion in the early part of 2018 for $100 million came as a big disappointment to many, including investors, employees and the entire Electronic Health Records (EHR) market. After all, this sale comes just two years after the company was determined to have a market valuation of around $1.5 billion and was expected to seek an IPO in 2017. It was one of the major players in the EHR market, while Allscripts played a relatively minor role.
To understand why such a significant player in the industry was sold for a fraction of its price requires an analysis of its customer base, its product, its business model and the industry landscape.
The Customer Base
ACA mandated that physicians use an EHR system by a deadline. That mandate led to companies launching EHR products without considering usability, adaptability, and customer fit. Practice Fusion was one of them. The major issue became the disconnect between the physician work patterns (that had been developed over years of practice) and the cookie-cutter EHR systems. Consequently, it required a monumental amount of work for practitioners, in order to get all of the necessary info into the format required by such inflexible EHR systems. As a result, bigger practices moved to paid EHR systems that they could customize by investing large amounts, while cost considerations drove the small and single provider practices, that were trying to meet the mandate without the financial resources to do so, towards Practice Fusion. In other words, Practice Fusion accumulated the non-premium segment of the market.
Over time, EHR users became more sophisticated and demanded more features, which effectively converted the EHR to an ERP (Enterprise Resource Planning) system. While other applications evolved, Practice Fusion remained as a product that only offered the EHR portion. They initially partnered with Kareo, which offered the medical billing software. This partnership dissolved when Kareo added their own EHR functions and became a competitor to Practice Fusion. Other products, like blueEHR, offer radiology, inventory, medical billing and more, that cover the entire operational aspects of a practice. In a nutshell, Practice Fusion failed to evolve as their users’ needs changed.
The Business Model
Practice Fusion employed a “Free” business model. There are two versions of a “Free” business model: Free and Freemium.
The Free business model operates similarly to Facebook in that the revenue is generated from advertisers and their commodity consists of their user base. The Freemium model consists of a product that is offered for free, with the option to acquire a more comprehensive version with payment.
Practice Fusion had a blend of the two; they generated revenue through advertising and they offered a free model, with the option to upgrade for a fee.
It would seem like having two potential revenue models would increase the likelihood of financial success, but it didn’t quite work that way for Practice Fusion. Their free version could not generate enough revenue through advertising and their premium model (for fee) didn’t offer an enticing, or necessary, advantage over the free model. The premium service was essentially an ad-free version of the software, and that was not enough enticement for the specific demographics that made up their user base – small and single provider practices.
The Industry Landscape
Practice Fusion rode on the surge in demand created by the ACA (Affordable Care Act) mandate. The mandate required certifications that adhered to the requirements set by the government – Meaningful user certification. Recent revelations of eclinicalworks being fined $155 million by the DOJ and a class action law suit against the same company caused significant anxiety among potential buyers. Practice Fusion too had received a similar inquiry from the DOJ. In short, the regulatory environment helped make and break the company.
With these bleak prospects for Practice Fusion, why would Allscripts even bother with acquiring them, after all, their user base offers no profit potential. The answer lies in the data…which could be upwards of 5 million patient visits a month.
While the sale of Practice Fusion was remarkable, one of the often-overlooked aspects has been the potential impact this acquisition could have on users. So, while the benefit to Allscripts is clear, what about the existing users? Their quality of service and payment model are currently up in the air, which should make many of them nervous. One could very well expect a transition to a paid mode.
Only time will tell what the actual impact of this acquisition is on the end-users; it is quite possible that their service and support will suffer. As the saying goes, “The only free cheese is in the mousetrap.”
If you would like to move from Practice Fusion, click here.
– Shameem C Hameed
Chief Executive Officer, blueEHR
- Health Data Exchange StandardsJul 31 , 2019
- Telehealth: Technology meets HealthcareApr 11 , 2019
- Integrated Care: The Future of Behavioral HealthMar 29 , 2019
- Troubles with Getting Mental Health Help and InsuranceMar 15 , 2019
- 7 Things to do to Protect Against Ransomware AttacksAug 08 , 2018
- Oh EHR, how can we love thee?Apr 20 , 2018
- What’s in Store for Practice Fusion UsersJan 31 , 2018
- What is precision medicine? And how can EHR help?Jan 05 , 2018
- What’s the SOAPware alternative?Dec 15 , 2017
- Artificial Intelligence, EHRs and the future of health technologyNov 02 , 2017
- ACA Executive order’s impact on EMR and eHealth technologyOct 25 , 2017
- EHRs and Mental Health: What Needs to Change?Sep 29 , 2017
- American Medical Association (And Others) Unhappy With EHR ProvidersSep 22 , 2017
- A Celebration of Citizenship DaySep 18 , 2017
- Amazon’s Stealthy Foray Into the World of EHRAug 18 , 2017
- Google, the Gender Gap and Personal ResponsibilityAug 10 , 2017
- Neal Patterson and the Mission of Health ITJul 21 , 2017
- The Myth About Motivating People To PerformJul 14 , 2017
- Fragmented health data and personalized medicine: What to do?Jul 07 , 2017
- Apple’s Venture Into the World of EHR SoftwareJun 23 , 2017
- What does the U.K. health record hack mean for eHealth security?Jun 15 , 2017
- Why Doctors need an All-rounder Healthcare Solution?Mar 19 , 2016
- Are we ready for data-driven healthcare?Mar 12 , 2016
- Using Medicare And Private Sector Claims Data for Patient care QualityFeb 26 , 2016
- The Doctor must “Evolve” with the TechnologyFeb 26 , 2016
- The 2015 Practice Profitability IndexFeb 25 , 2016
- Telemedicine – Benefits and ChallengesFeb 24 , 2016
- ‘Mind Your Risks’ – The NIH health campaignFeb 22 , 2016
- Middle East and Arab Health 2016Feb 03 , 2016
- Medical Billing in 2016Jan 08 , 2016
- CMS publishes 2014 National Health ExpendituresJan 02 , 2016
- Results from the Practice Profitability Index 2015Dec 16 , 2015
- This National Diabetes Month, you have a role in diabetes education and supportNov 26 , 2015
- Safe Texting in HealthCare: Do’s & Dont’sNov 18 , 2015
- Is TeleMedicine the future of healthcare ?Nov 13 , 2015
- Evaluating specific KPIs can improve business performanceNov 09 , 2015
- 50 Years of Medicare: More than 55 million Americans covered by MedicareSep 23 , 2015
- How Much Does Healthcare Cost Matter To A Patient?Sep 18 , 2015
- How does Affordable Care Act Change Your Practice?Sep 11 , 2015
- A ‘Don’t Do’ List to avoid patient no-showsAug 21 , 2015
- Add more patients and grow your medical business in 5 easy stepsAug 05 , 2015
- Medicare Trust Fund is now protected by the Fraud Prevention SystemJul 16 , 2015
- ICD-10: A Short StoryMay 19 , 2015
- Patient portals and patient engagement: Is there a link?Apr 21 , 2015
- Meaningful Use Stage 3: First LookApr 07 , 2015
- 6 Ways Physicians can Free Patient RecordsMar 17 , 2015
- Is the EHR market saturated?Dec 04 , 2014
- 5 Benefits of healthcare information exchanges for small practicesApr 22 , 2014
- New Study shows EMR Adoption Increases Patient Confidence, Loyalty and SatisfactionApr 22 , 2014
- Cloud-Based EMR Vendors and Patient Data SecurityApr 22 , 2014