How Practice Fusion Makes Money

Nine-year-old Practice Fusion stole a march on larger competitors like Allscripts or McKesson by providing its EMR system for free to physicians, who receive government money for adopting digital records. The company, which has raised about $150 million from VCs, generates revenue from labs, pharmacies, and imaging centers whose services physicians can order via the EMR. It has also attracted pharmaceutical firms: Merck & Co. sponsors a check box on the EMR that asks whether government-recommended vaccines are required for the patient. This helps Merck boost vaccine sales, and to learn more about doctors’ behavior (and track outcomes). Physicians can also choose to use the EMR to remind patients to undergo certain tests or to take/refill their medication, offering opportunities for further Big Pharma sponsorship. Current deals, according to Orbimed’s Stephen Yecies, are category- rather than brand-specific, involving companies with large share of a particular market such as hypertension. It’s all in the name of better prevention – many doctors are now graded and, in some cases paid, according to meeting best-practice targets. Yet drug firms also pay to push brand-specific ads to doctors and users via the Practice Fusion software.

PF’s latest move is toward patients, with its Patient Fusion site; in August 2014 the company partnered with Vitals, which...