Free electronic medical record system comes with strings attached

Practice Fusion's model is the first known EMR to place ads throughout Web-based patient records and collect patient data directly from doctors for commercial sale.

By Pamela Lewis Dolan — Posted May 7, 2007

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Realizing that many practices are unable to install an electronic medical record system due to their cost, Practice Fusion, a San Francisco-based company, is offering a Web-based system at a price it would seem no one can refuse -- free.

But free comes with a price. The system would put advertising on the medical record. And nonidentified data from the patient records would be packaged and sold for marketing purposes.

Critics say Practice Fusion's business model is taking advantage of patient-doctor trust by commercializing patient information. But others say this model might be a way to get EMRs into physicians' offices.

Practice Fusion founder and CEO Ryan Howard said the goal was to create an inexpensive, on-demand model that removed the complexities that most physician practices were dealing with. He said his company wanted to offer a low-cost EMR, but when it realized that for many physicians any cost was one "you'd rather not incur," it came up with the idea to offer it for free under a business model that would allow the company to profit on the back end. If a practice doesn't want ads, or the data de-identified and sold, the practice would pay $250 per physician, per month, for the system.

"There's no denying the model is novel," said Howard, formerly an independent consultant for Brown & Toland Medical Group, a 1,500-physician independent practice association in the San Francisco area. "But I think it will be successful."

Howard said several large groups already have signed on, which brings the system to 2,600 physicians. Don E. Detmer, MD, president and CEO of the American Medical Informatics Assn., said low-cost EMRs clearly can be seen as a benefit to doctors. And their availability helps move the nation toward President Bush's goal of having a national health network by 2014.

A 2005 study by the Commonwealth Fund found that for small practices installing EMRs, initial costs average $44,000 per physician with ongoing costs averaging $8,400 per year. Cost is considered the largest impediment to physicians adopting a paperless practice.

"How this system [the national Health IT initiative] is going to be funded remains to be seen," said Mark Rothstein, an attorney who sits on the National Committee on Vital and Health Statistics and chairs the privacy and confidentiality subcommittee. "But as far as I'm concerned, large-scale projects based on selling records of individuals, presumably without their consent, is a nonstarter as to how the network ought to be funded."

Because the system is Web-based, Practice Fusion decided to tap into a source of revenue popular among Web-site administrators -- Google's AdSense program.

AdSense is a way for Web site owners to earn money by hosting Google ads on their Web sites. In this case, the ads would be placed throughout the pages of the online EMRs. The placement of ads is determined by keywords and phrases, such as "diabetes" or "high blood pressure," that advertisers "sponsor" through a competitive price-per-click bidding process. When the keywords are found in the EMRs, corresponding ads will appear that, when clicked on, will take the user to the advertiser's Web site. No one with an ad on the medical record could actually see the record, nor get any information from it.

Howard says the ads are not expected to draw a whole lot of attention from doctors. In fact, the company's business plan accounts for only one click on an ad per doctor each quarter. The company plans to sell the ad space not only on a per-click basis but also on a "price per million" plan that will charge advertisers, regardless of clicks, to simply expose their ads on the pages of the EMRs.

Jim Rodriguez, CEO of Physicians Integrated Medical Group, one of the first to use Practice Fusion's system, said that since physician practices are "inundated with pharmaceutical representatives every day anyway," he doesn't see what Practice Fusion is doing as any different. In fact, he thinks the ads will be more relevant to doctors because they will be specific to each patient's condition.

The part of the plan that bothers Seattle attorney John Christiansen, who focuses on health care risk management and information security compliance, is whether the ads could violate anti-kickback laws. He said if a Medicare patient is prescribed drugs or is treated with an advertised medical device because of the ads presented to the patient's doctor, one could argue that they received a kickback in the form of a free EMR. As of yet, no one at the Centers for Medicare & Medicaid Services has made that argument formally.

Selling data

The other part of Practice Fusion's model allows for de-identified patient data to be sold for commercial purposes. HIPAA allows for de-identified data to be packaged and transferred, though under most EMR models the idea is that such information is shared for research or clinical purposes. Any payment or remuneration to doctors, Rothstein said, was really intended to compensate the time it took to compile and de-identify the data.

But physicians' prescribing data have long been farmed for commercial purposes.

"Secondary use of data has been used with positive results for many years," said Patricia Wise, RN, vice president of health care information systems for the Healthcare Information and Management Systems Society, a Chicago-based membership organization for health IT professionals. She said there is certainly a place for its use in medicine, when done properly, and while this is the first commercial use of de-identified data she has seen, she doesn't necessarily view it as improper.

But what worries some about the Practice Fusion model is that physicians, through the use of this system, are more directly involved in the commercial use of their data. Rothstein said that because the information is coming directly from the doctor's office, patients likely would find the act disconcerting.

At the very least, doctors should make their patients aware and give them the chance to opt out, Rothstein said.

Rodriguez said his IPA's patients might be concerned about how Practice Fusion works, so he will "explain what we are doing and how secure it is."

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