The Risk of Free EHR Starting to Cost

I’ve been writing about Free EHR since I first started this blog in 2005. Initially I was mostly writing about the “free” open source EHR model like I did in this Open Source in Healthcare post in 2006. I still remember when I found out about Free EHR vendor Practice Fusion and wrote this post in 2008 about Free EHR Software and Some of the Hidden Costs. I think it’s fair to say that I was a bit more skeptical of the Free EHR model then than I am now. Practice Fusion and Mitochon Systems are both Free EHR vendors that advertise on this site (Full Disclosure). So, I’ve had a chance to talk at length with both companies. I must admit that the more I talk with them, the more intrigued I am with the Free EHR model.

However, there are still challenges that are faced by the Free EHR model. This struck home quite strongly when I saw the relatively recent news about Free accounting software vendor, Outright, changing from a free model to a paid model. Funny thing is that I was really close to using Outright for my accounting, but then opted to go instead for the Free open source software Gnucash. However, this change in direction made me pause and wonder what would happen if a Free EHR vendor chose to switch from the free model to a paid model.

No doubt that any change in Free EHR business model would likely be similar to Outright where they provide a fair amount of time for users to remain on the free model. They’d also have to provide some way to get your data out of the EHR or else their paid model would not likely survive. The bad will that would be created from holding the practice’s data for “ransom” would be terrible for a company. Although, switching from a free EHR model to a paid one would be even more detrimental I think.

Of course, the EHR company could easily argue that at some point they’re faced with only a couple options: close the company or switch from the free to a paid EHR model. Faced with those options, would you rather have your EHR company go under or be able to pay them for the services you’re receiving? Although, as I’ve discussed in other Free EHR posts, just closing the company down completely wouldn’t likely be an option. Instead, the company would instead be acquired for some discounted rate by another EHR vendor. So, the real options would be to switch EHR companies since the acquiring company would likely want you to switch to their EHR or start paying for the EHR services. I think in most cases, EHR users would prefer to start paying for the EHR services. Even if deep down they’d feel like it was wrong and unfair.

As I argued in the post above, the real problem with all of this is that transferring EMR and EHR data isn’t as simple as even accounting data (like the Outright example above). Moving from one EHR to another is a pretty intense process and leaves much to be desired. Although, it’s not like Free EHR software are the only EHR companies that could go under, be bought out, be merged, etc. Everyone says that EHR company consolidation has to happen and so the transfer of data from one EMR and EHR company to another could happen for all sorts of EMR companies large (see Misys) and small.

Also, I think one other difference between the Free EHR companies and the Outright example above is that Free EHR companies aren’t just an ad only business model like Outright. For example, there’s a lot more value in aggregate healthcare data than there is in aggregate accounting data. Even anonymous healthcare data is incredibly valuable if done right. Not to mention a number of other possible business models that could be placed on top of a Free EHR offering.

As always, I’m not trying to scare people away from the Free EHR model or drive people to that model either. My point is to just bring to light all of the possibilities of what can happen if someone should choose to go with the Free EHR model. I’m sure there are even more angles to this which will be brought up in the comments. I look forward to the discussion.

I also sent an email to my contacts at Practice Fusion and Mitochon Systems saying I was going to write an article about this and asked them for a response. Here are their responses and I’m quite sure they’ll join us in the comments as well.

Practice Fusion’s response:
It’s hard to see a young company like Outright struggle with their pricing, but the truth is that being a free, web-based business is not for everyone. Practice Fusion does not succeed by being free alone. Our dedication to delivering the easiest to use product, our phenomenal support team, the support of 80,000 healthcare providers across the country, our sustainable platform – these are the elements that have made us the largest EHR community in the country. We are 100% committed to bringing free EHR technology to every doctor in the country and that will never, ever change.

Mitochon System’s response
There are two key differences between Mitochon’s free EHR model and the small software service company you cited, Outright.

First, Outright offers its services directly to individual consumers. There is no third-party payer involved and the service does not provide value-added for anyone but the individual purchaser. In contrast, healthcare is often compared to a three-legged stool: patients, providers (physicians, hospitals) and payers (health plans, employers). When a physician provides care to a patient, a third-party usually picks up all or part of the bill. Free EHRs can potentially add value for all three parties involved. Our experience has been that both payers and providers are willing to subsidize or support free EHRs through paid clinical messaging (ads, health message reminders).

Second, it appears that Outright tried the ad-supported model and it failed for them. Although the article does not state exactly why the advertisers were dissatisfied, it might be that the user demographic was poor. Perhaps the Outright users just didn’t buy enough of the advertised products.

In contrast, physicians are major purchasers of goods and services for their patients and their organizations. According to Dr. John Eisenberg, a leading medical economist, physicians’ professional fees alone represent about 20% of all health care expenditures and they are responsible for decisions that govern how 90% of each health care dollar is allocated. With annual health care expenditures in the U.S. now topping $2.5 trillion, clearly physicians are a highly desirable audience for paid messaging delivered by many different organizations.

In conclusion, we know for a fact that the free EHR model works now and we believe it will grow and expand dramatically in the future.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

18 Comments

  • John,

    I think this is a great idea for a post and confronts some potential issues EHR users may face but I can’t say I like how you soft-pitched it to Practice Fusion or Mitochon. You’d have had quite a response to post about today if you’d just floated this out there and let them respond.

  • I think it was justified to ask for comments from Practice Fusion and Mitochon. John walks a fine line managing editorial integrity with not alienating current and potential advertisers.

    I’d like to hear from providers who have made the switch from one EMR to another, and especially from a free model to a paid one – even if the products are from different vendors. I’m sure there are some interesting stories out there.

  • Hi Jennifer – Dr. West, the blogger over at Happy EMR Doctor (another great site in John’s Healthcare Scene network) is a Practice Fusion user who switched from a paid EMR system. I’m sure he would welcome your questions!

    And you can find more stories from doctors and nurses making the switch on our website and social media sites.

    Emily
    PracticeFusion.com

  • AndrewC,
    I can appreciate your perspective. To me reaching out to Practice Fusion and Mitochon added another level and layer to the conversation. Certainly I could have just let them respond in the comments. Something I’ve done many times. In this case I was interested to hear their response and reaction to a similar company’s change of business model since they could add their perspective to the conversation.

    Jennifer,
    There are definitely a lot of stories about EHR vendor switching. I’ll have to see if I can dig some up.

  • The problem with both vendor’s response is that they only compared their scenario to Outright only. Outright is not the only company or industry to have started off as a ad sponsored web application and then switched to a pay model. That being said the only company that comes to mind that has kept their end of the bargain on ad supported is Google. Let’s face it, neither vendors can compete on that level because Google can be targeting any number of types of users. Practice Fusion and Mitochon can only target Physicians… and that in it’s self limits their sponsorship abilities.

    There’s an old business saying that every business major learns and it goes like this “THERE’S NOT SUCH THING AS A FREE LUNCH!” and I think physicians and users of these type’s of systems need to pay attention to that saying. Because sooner or later they are going to have to pay… in what way? I am not sure, but they will pay in some way or another.

  • Chris L,
    I agree that I was surprised how much they focused on how they were different from Outright as opposed to just addressing the possibility of switching from free to paid as well. Although, I could quite likely take the blame for that since maybe the way I asked them for a response encouraged an Outright comparison response.

    There are other services beyond just Google that have made a go of it. Facebook and Twitter both come to mind. I’m sure there are many others. Sure, having only physicians as a target does limit your market, but in some ways it’s nice because you can provide companies such a tight niche to advertise their products. Doctors spend a lot of money and control the spending of a lot of patients (ie. drugs) as well. So, while being a niche, they are a potentially very valuable niche.

    I agree completely that there’s no free lunch though. Even if there’s no financial cost to a “free EHR’ there are other costs to using it that aren’t necessarily monetary.

  • Are we now comparing free EHRs to Facebook & Twitter? Really?

    I’m oddly intrigued by the “free” model.
    Skeptical one might say.
    Though not against the idea by any means.

    Looking at one of the vendors explanations you can have the free EHR which is ad supported OR pay $100 per month per provider.

    This same vendor says the ads are unobtrusive…is this what they tell their ad prospects?

    As a patient do you really want your doc distracted by an ad as they input some important note about your visit?

    What other revenue stream is there?
    Again, I’m not against additional revenue generation, but I think it is important to be crystal clear.

    Are they selling de-identified PHI?

    Many docs don’t realize they can make revenue from selling de-identified PHI…IF…their EHR is server based in plunked in their own office.

    Again, I’m not saying a free EHR is a bad deal, BUT in order to make a good decision, one must have the bigger picture.

  • Sure, there’s some comparison with Facebook and Twitter. They both provide a service to a set of users and in return for providing that service they show you ads that relate to you.

    Word is that almost no one signs up for the $100 per month option. They all opt for the Free.

    The ads are unobtrusive. Now if we only knew how well they monetized;-)

    I think there are a number of other revenue streams. I wish I wasn’t so tired and I’d find my other post on it. Some are selling the aggregate data. There are multiple ad models that could work too (insurance, pharmaceutical, etc). There are research study options that could be pursued after agreement by patient and doctor. Just to name a few.

  • One issue that I can see with the Free EHR’s is its ability to meet the governments 15% investment requirement for the cost of the EHR. I believe that works out to $3,750 for the first year and $1,75 each year after. Now this only applies to the Medicaid stimulus payments but might be something that EP’s don’t realize. You can visit this link for more information. http://www.healthitbill.com/index.php?topic=12.0

  • We have been in touch with states that have local state-level language concerning a 15% earmarking for “allowable costs” for EHR investment – Ohio, initially – and have asked whether a free EHR presents a problem in accessing Medicaid EHR Incentive bonus money. Their response is that, NO there is not an barrier to using a free EHR – we are all wanting to encourage EHR adoption however we can do so.

    More extensive commentary in a blog piece I wrote about this today on EHR Bloggers

  • Thanks for the response Dr. Rowley. This is what makes the Medicaid stuff so tricky is that each state can kind of do what they want.

  • I’m really interested in knowing more about the practice of EHR vendors aggregating and selling deidentified patient data, but are either Mitochon or Practice Fusion actually making money doing this? I reviewed the PF Research Center webpage, and it said they offered the deidentified data for free, so is there really any sort of profit motive for EHR vendors offering data sets?

  • Sarah,
    I think it’s still too early for both companies when it comes to that part of the revenue model. Although, I could be wrong. If they’d just open up their books to me so I could analyze their revenue, then I could answer your question. Sadly, I don’t think they want to do that.

  • I found this post to be very interesting. I am training as an Implementation Support Specialist through an ARRA HIT grant program (Normandale College in MN) plus have 30+ years IT experience.

    Whatever EMR a provider / practice chooses (free or paid), the data being held ‘hostage’ should never be an issue as the provider should always have recent copies of the data stored elsewhere.

    This isn’t to say there wouldn’t be significant work in migrating the patient data to another EMR solution if need be (if the current EMR vendor were to go belly-up or be acquired) but having the actual data separate from the current EMR vendor or system is imperative.

  • Cyndy P.
    The problem with your point is that I don’t know of any SaaS EMR companies that provide a copy of all a provider’s data locally. I’ve argued for this in past posts, and as near as I can tell no EMR vendor has provided this feature. Some will give it to you if you leave their EMR. Although, you can imagine how messy that can be.

    You can see some of the previous discussion about this topic: https://www.healthcareittoday.com/2010/04/09/more-emr-data-backups/

  • There are a few free options out, Practice Fusion is one of them. Mitochon Systems is another.

    If you are looking to go the mobile route checkout drchrono EHR. They are the best mobile EHR. http://drchrono.com

    Becky

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