Health IT

Practice Fusion’s future seems uncertain despite Theranos deal

If anyone knows what’s really going on with EHR vendor Practice Fusion, please raise your hand.

If anyone knows what’s really going on with Practice Fusion, please raise your hand.

Earlier this month, the San Francisco vendor of a free, cloud-based electronic health records system for office-based physicians named a new, interim CEO, Tom Langan, to replace founding CEO Ryan Howard. Howard stays on as chairman ahead of a rumored initial public offering and Langan is continuing his role as chief commercial officer.

Practice Fusion claims more than 112,000 “monthly active medical professionals” on its platforms, which include an advertising-supported free version and a paid EHR without the ads. The San Francisco-based company also said it manages upwards of 100 million patient records.

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But Practice Fusion still has a lot of doubters and a lot of critics. According to official Centers for Medicare and Medicaid Services data, nearly 16,000 eligible providers had attested to Meaningful Use of a Practice Fusion EHR through March. Granted, nurses, medical assistants and others in doctor’s offices are not individually eligible for Meaningful Use incentive money, so Practice Fusion may in fact have 112,000 regular users.

Seven other vendors had more non-hospital MU attestations than Practice Fusion, and leader Epic Systems had twice as many than its closest competitor.

As for the critics, we turn to HIStalk, the best place to pick up health IT scuttlebutt this side of a booze-soaked HIMSS afterparty (and HIStalk puts on the biggest booze-soaked HIMSS afterparty). This appeared as an unverified comment last week:

From Former PF Employee: “Re: Practice Fusion’s interim CEO. Ryan Howard was never going to make it as CEO through an IPO. He had too many issues and wasn’t able to temper them enough. An IPO may happen but isn’t as imminent as the PR team says — that was a tactic to distract people from the need to change CEOs. It wasn’t supposed to be this sudden, but that’s how Ryan is and part of why this is a good decision overall. Side note: why does everyone think PF only generates revenue from ads and selling data? Ads are maybe 30 percent and data actually isn’t sold (while ‘insights’ from the data are sold, that’s less than five percent too).” Unverified.

Again, it’s unverified, but not the first bit of grumbling I’ve heard about Practice Fusion in recent years. But the company keeps on growing, at least in terms of users and partners.

Monday, Practice Fusion announced that it now has more than 600 partners, including a potential biggie for one of its most recent: Theranos. That company, run by the world’s youngest self-made female billionaire, Elizabeth Holmes, is quickly becoming a disruptive force in the clinical laboratory business.

Practice Fusion also said it had inked a deal with outpatient imaging service provider RadNet.

Together, the two new partnerships add more convenience for patients of Practice Fusion users, who can now have one-drop blood tests done at Theranos Wellness Centers inside Walgreens stores or get X-rays and MRIs at RadNet outpatient imaging centers. The integration means that patient test results will show up automatically in their Practice Fusion EHRs.

That’s great, but let’s think again about the notion of a Practice Fusion IPO being imminent. For one thing, Theranos right now is only in a handful of Walgreens stores in Phoenix and Silicon Valley. RadNet has more than 250 locations, but those are concentrated in just seven states. Consider those partnerships potentially big, but not right away.

Sure, Practice Fusion has the other 600 or so partners. But is the company profitable? We won’t know until the vendor files an IPO registration statement.

The fact that telehealth service provider Teladoc has never turned a profit didn’t seem to hurt that company’s IPO. The sharp market downturn the last few days has brought Teladoc stock down below $24 from a high of $35.42, but still above the IPO price of $19.

But given that nobody knows if this is a simple correction or the beginnings of a true bear market, don’t expect Practice Fusion — or anybody else, really — to go public right away. After all, the company has an interim CEO right now amidst all the other uncertainty. That can’t inspire a lot of investor confidence.