Why Practice Fusion Will be One Exciting IPO

September 7. 2015. 3 mins read
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In an article last week, we discussed an innovative company called Teladoc which is making doctors available 24/7 for consultations at the low price of $40 payable by credit card. One thing we noticed was that in order to use this service offering, the patient is first required to complete an electronic health record. This concept of an “electronic health record” or EHR seems like a much more efficient way to track a patient’s health data across healthcare service providers such as doctors, pharmacies, or even insurance companies. However, some debates are being had as to whether or not the high costs of implementing EHRs for a typical doctor’s office really provide a return on investment that makes economic sense. A company called Practice Fusion then decided to turn the whole EHR space on its head by offering their platform for free.

About Practice Fusion

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Founded in 2005, Practice Fusion has taken in $157.5 million in funding so far from 31 different investors including high profile names like Kleiner Perkins Caufield & Byers, Salesforce, Qualcomm, and Peter Thiel. Practice Fusion’s mission is to connect doctors, patients, and data to drive better health and save lives. They do so through a cloud-based EHR system that is freely available for use. The reasoning behind making their platform free becomes more apparent when we take a look at the history of EHR.

In 2004, President Bush set a goal that every American would have an EHR by 2014. While that ambitious goal didn’t quite pan out, the government has taken a carrot and stick approach to stimulate adoption. Physicians who could show “meaningful use” of EHRs could be eligible for Medicare reimbursement incentives and at the same time, those who chose not to adopt will begin to face a 1% reduction in Medicare reimbursements with that percentage increasing over time until “meaningful use” can be demonstrated. This background is very relevant to Practice Fusion because physicians are essentially being forced by the government to adopt EHRs, and what better solution for those who are being forced to adopt than a free solution. In fact, you can even make money by adopting Practice Fusion as they state “Your free EHR can help you qualify for thousands in Meaningful Use incentives“.

The Practice Fusion cloud-based EHR solution is free and always will be free. It is the fastest growing and best-ranked EHR today. All you need to use it is a computer with internet access. This easy to access cloud-based EHR system now has over 100 million patient records under management which is over 30% of the entire population of the United States. Used by more than 112,000 health-care professionals, the cloud-based EHR system facilitates over 300,000 patient visits every day. The system also allows “e-prescriptions” which are supported by over 70,000 pharmacies. Practice Fusion works with every major pharmaceutical company in the United States and has over 600 companies they have partnered with, including Theranos, making them the most integrated cloud-based EHR platform out there. They’re not just storing data, but rather creating an entire ecosystem on their platform:


So how does Practice Fusion make their money? Firstly, there’s basic advertising that can target physicians using the Practice Fusion EHR platform. Second, there are their enterprise partnerships through which they can promote other product offerings and generate commissions. Lastly is their “Insight” tool, an easy-to-use analytics package that lets you browse their massive data-set. We signed up for a free account and literally in 15 seconds were able to perform a query and see the results. In this case, we simply looked up what types of medications are most commonly prescribed for ADD (Adderall at a 26% market share). The system can even tell you what drugs people are switching between for over 2,000 different medications:


There is an incredible amount of data to peruse, but to see all of it you’ll need a “premium subscription”. If Practice Fusion can continue to dominate the EHR market in the U.S., they will have on their hands one of the most valuable data-sets in the entire healthcare industry.

Rock Health survey put Practice Fusion second behind Jawbone as the most likely digital health company to go public in 2015. Practice Fusion recently underwent senior management changes leading speculators to believe they are positioning themselves for an IPO. Even the founder of Practice Fusion said they are preparing for an IPO and are among “the most viable digital health companies with the potential to go public”.


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