- Practice Fusion is abandoning the business model that contributed to its popularity and will no longer offer free EHR software to physicians, according to a recent report by CNBC.
The decision to charge physicians to use its EHR system software comes six weeks after Practice Fusion was acquired by Allscripts in a $100-million deal.
Practice Fusion initially gained popularity among physicians by offering free EHR software — a stark contrast to the expensive EHR system offerings available through large enterprise health IT companies. The EHR company generated revenue by showing relevant pharmaceutical ads to users.
However, CNBC reported Practice Fusion recently began notifying customers that users will soon be required to pay a monthly subscription fee of $100 per physician per month. The EHR company’s business model will start including these subscription payments this summer, according to two unnamed sources familiar with the matter. The changes have not been made public.
Founder and former CEO Ryan Howard — who left the company in 2015 after the company missed financial goals — had previously stated “Practice Fusion will always be free.”
The product had been especially popular among small physician practices including primary care physicians and dermatologists. The health IT company’s user base has grown to include about 100,000 healthcare providers.
As part of an effort to continue its mission as an affordable EHR offering, a Practice Fusion spokesperson told CNBC it has “been offering some features and services to our customers at no cost while other solutions and services offered do involve reasonable prices.”
"We have a product announcement upcoming in early March, and we look forward to sharing it further with you and all of our stakeholders very soon," said the Practice Fusion spokesperson in a statement to CNBC.
CareCloud CEO Ken Comee stated Practice Fusion’s shift away from offering free EHR software could level the playing field for other vendors such as CareCloud that specialize in meeting the needs of independent physician practices
"Maintaining the customer base could be a challenge because they're charging for something that was once free," Comee told CNBC. "It might encourage doctors to evaluate their options."
Practice Fusions EHR offerings now serve as a complement to Allscripts existing ambulatory clinical portfolio as a value offering to accommodate under-served clinicians in small and individual physician practices. Established in 2005, the health IT company currently supports 30,000 ambulatory practices and assists physicians with 5 million patient visits per month.
Prior to its acquisition by Allscripts, Practice Fusion was counted among the top 10 ambulatory EHR vendors among physician practices, according to data from Definitive Healthcare.
In a report from Reaction Data earlier this year, Practice Fusion received one of the highest overall satisfaction ratings from users at 75 percent. Furthermore, the highest number of Practice Fusion users reported being enthusiastic advocates of the technology, with 70 percent reportedly being happy with the EHR offering. Meanwhile, Allscripts received one of the worst overall satisfaction ratings at 28 percent.
Despite its popularity, Practice Fusion was sold to Allscripts for one-fifteenth of its expected valuation in 2016, according to CNBC. The value of the deal may have been affected by a settlement the health IT company paid to the Federal Trade Commission (FTC) in June 2016 following charges it had misled customers about the privacy of doctor reviews. Practice Fusion had allegedly publicly disclosed physician reviews of its product without informing consumers of plans to post the information.
Following the settlement, Practice Fusion revised its communications with consumers and its section on surveys and ratings to include statements that consumer feedback could be made public.