Practice Fusion Files IPO Prospectus: The Rise of America's Largest Cloud-Based EHR Platform

What Kind of Company Is Practice Fusion? One in Five Americans Has Their Electronic Health Records Stored on the Practice Fusion Platform.

On January 14, Practice Fusion released a summary of its corporate development in 2015. Last year, Practice Fusion added more than 5,000 medical practices and dozens of life sciences partners, while achieving a year-over-year revenue growth of over 70% for the full year. Through its FusionConnect ecosystem, Practice Fusion also strengthened collaborations with key healthcare systems and partners, including 150 top life sciences companies. Last October, Practice Fusion surpassed 5 million patient visits in a single month. The platform helps physicians manage more than 250,000 patient visits daily. Since its launch, Practice Fusion’s electronic health record (EHR) platform has facilitated over 178 million clinical encounters.

Practice Fusion, founded in 2005, is the largest physician-patient community and the largest cloud-based electronic health record (EHR) system in the United States. The platform is used by over 120,000 healthcare professionals and 80 million patients. To date, Practice Fusion has raised $151 million in venture capital funding.

In May 2015, the venture capital publication VentureBeat surveyed digital health investors, who selected the companies most likely to go public that year; Practice Fusion was among those listed.

From Being Ignored to Industry Leader, From Near Death to Imminent IPO: How Did Practice Fusion Carve Out Its Path?

Ryan Howard, Founder of Practice Fusion

The Original Intention Behind Founding the Company: The Value of Existence

Ryan Howard is the founder of Practice Fusion. He previously served as a project manager at Saqqara, where he was responsible for connecting Walmart’s supply chain with other companies, meaning his work essentially revolved around integration. A close friend of Howard’s was diagnosed with leukemia in 1999, when Howard was in his twenties. This experience profoundly shifted his perspective, leading him to question the work he had been doing over the previous five years. “I thought, even if I were processing customer claims at Blue Shield, at least by the end of the day, customers would benefit from my work. But at Walmart, the entire value of my work amounted to their stock price rising by another five cents,” Howard said.

Howard subsequently joined Brown and Toland, the largest physician group in California. He was responsible for developing a comprehensive HIPAA implementation strategy for Brown & Toland’s community of 1,500 physicians, as well as for clearinghouses and insurance payers. During this process, Howard identified a significant problem: the physician group, comprising 1,500 doctors, relied on more than 400 different systems for data collection. Observing the extreme disarray in patient billing and health record systems, Howard became convinced that there was a critical need for a secure, robust cloud-based solution.

Subsequently, Howard arrived at the Grand Central cloud platform, where he discovered that users could build and deploy web services in the cloud. For the first time, Howard began to consider leveraging this technology and introducing it into the healthcare sector, as most physicians lacked technical expertise and IT resources. In the absence of capital and IT support, the “cloud” would serve as the optimal standalone solution. Another challenge was integration: operating electronic health records (EHRs) required coordination among numerous laboratories, pharmacies, imaging centers, and other entities. By connecting through the “cloud,” these disparate elements could be integrated to achieve significant economies of scale.

In 2005, Howard founded Practice Fusion in his apartment.

Three God-Tier Products: The First One Took Eight Years to Develop Before the Second Was Created

Over the past decade since its inception, Practice Fusion has offered only three flagship products: one designed for physicians, one for patients, and one for research institutions.

In 2005, Howard launched the electronic health record (EHR) platform Practice Fusion. The services provided by Practice Fusion primarily include: documenting medical records, creating medical charts, scheduling appointments, issuing e-prescriptions, processing billing, and integrating laboratory data. Patient health information from different clinics can be consolidated on Practice Fusion, allowing physicians to review patients’ medical histories and communicate with their previous healthcare providers. Furthermore, Practice Fusion can automatically identify prescription content, thereby reducing the rate of misdiagnosis. Additionally, Practice Fusion connects with hundreds of laboratories, pharmacies, and imaging centers, and is networked with the three largest web-based billing companies in the United States, assisting physicians and insurance companies in processing patient bills.

In January 2013, the company launched a product named Practice Fusion Insight, designed to provide big data to research institutions, insurance companies, and pharmaceutical firms, enabling them to accurately grasp clinical trends and make data-driven decisions. Users can search for over 2,000 analytical diagnostics in the Practice Fusion Insight database and observe how trends evolve over time and vary with patients’ age, weight, and gender. The platform allows users to see which medical specialties have the highest number of physicians across China and which diseases are experiencing the fastest growth in the current week. Furthermore, users can search for any drug prescription within Practice Fusion and compare its current and historical market shares.



In April 2013, a brand-new patient-centric product, Patient Fusion, was launched. Patient Fusion offers location-based physician ratings and one-hour appointment scheduling services. Since the electronic health record (EHR) platform Practice Fusion already has access to physicians’ schedules, patients using Patient Fusion can book appointments more conveniently. Additionally, patients can rate their care experiences, thereby creating a platform for word-of-mouth promotion for physicians. Patient Fusion also provides patients with medical expense reports and predicts the approximate cost of their next consultation.

Practice Fusion captured physicians, while Patient Fusion captured patients; these two platforms facilitated mutual patient-provider referrals and complemented each other. Practice Fusion Insight engaged key stakeholders surrounding healthcare delivery,
Practice Fusion is gradually laying out its product line to provide different services for the three major groups in healthcare.

Profit Model: A Grueling Journey of Trial and Error

In the United States, monetization is no easy feat; Practice Fusion has endured numerous hardships and even came close to collapse.

From Paid to Free

When Practice Fusion was first launched, Howard believed that such a highly useful product for physicians would be widely embraced. However, reality dealt him a harsh blow. Over the course of four years, Howard led his team in visiting countless doctors, exhausting their savings. At the most difficult point, they had to rely on insurance payouts from a car accident to pay employee salaries. At that time, electronic health records (EHRs) were relatively expensive for U.S. physicians, with annual costs averaging around $10,000, while primary care physicians in California earned an average of $120,000 per year. This was a technology many physicians were unwilling to pay for, largely due to budget constraints. Although Practice Fusion set its price relatively low at $300 per month, physicians remained reluctant to adopt it, and even investment firms were pessimistic about its prospects. Left with few options, Howard reduced the price to $50 per month. Nevertheless, the company saw little improvement and even teetered on the brink of bankruptcy at one point.



Fortunately, there is always a way out. In 2009, the Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted under the Obama administration, saved Practice Fusion. The legislation stipulated that physicians who adopted electronic health record (EHR) systems in their clinics by 2015 would receive Medicare incentive payments ranging from $44,000 to $64,000; otherwise, they would face financial penalties. This policy sent shockwaves through the industry. Seizing this opportunity to revive Practice Fusion, Howard astutely offered the EHR system to physicians free of charge, thereby swiftly gaining access to the previously closed-off medical community. In 2012 alone, the company helped small clinics secure approximately $100 million in government incentives.

Advertising Revenue

Riding the tailwinds of favorable policies, Practice Fusion expanded rapidly. But with its product offered free of charge to physicians, how did it generate revenue?



Currently, the majority of Practice Fusion’s revenue is derived from advertising. Statistics show that most physicians spend 6–8 hours per day on electronic health record (EHR) systems. A single physician in California influences up to $2.5 million in annual healthcare spending. Furthermore, Practice Fusion employs keyword-targeted advertising to achieve precise marketing, making its platform highly attractive to pharmaceutical companies, insurance providers, and research institutions. Practice Fusion exercises caution in its advertising practices: ads are placed at the bottom of the page and do not pop up or occupy the central portion of the screen, ensuring that promotional content does not disrupt physicians’ workflows. In 2012, Practice Fusion’s advertising revenue reached tens of millions of dollars.

(For more information, click on the article: The Practice Fusion Model is Becoming a New Marketing Tool for Pharmaceutical Companies)http://www.vcbeat.top/11906.html)

Data Revenue

Beyond advertising, Howard believes that big data is the company’s true future profit driver. In implementing its free strategy, Practice Fusion laid the groundwork for its big data strategy—Physicians using the Practice Fusion platform must agree to fully transfer ownership of patient data to the company.。



Practice Fusion has also established a specialized data research team to explore how to maximize the value of medical data without disclosing patients’ specific identifying information or compromising their privacy. In 2013, the company launched Practice Fusion Insight, a paid product offering big data services.

In addition to Practice Fusion Insight, another move in the company’s big data strategy was the acquisition of 100Plus, a personal health prediction company. Hog, the founder of 100Plus, led a team of four to join Practice Fusion’s data and product departments.

Following the integration of 100Plus, Practice Fusion will focus its business on the patient end. Practice Fusion plans to connect its system with patients' wearable devices to collect health data. In the future, all of a patient's health-related activities may be recorded within their electronic health records (EHRs).

Industry expectations are that, after integrating these data, Practice Fusion’s future valuation will exceed $1 billion.

Other Income

In addition to advertising and data revenue, Practice Fusion is also exploring other revenue streams, such as helping pharmaceutical companies recruit volunteers for clinical trials.

In April 2015, Practice Fusion partnered with ePatientFinder to establish the largest clinical trial network in China, enabling providers to leverage electronic medical records (EMR) to identify new clinical trials and select eligible patients.

In fact, this is a commercial venture, as other companies’ attempts to conduct clinical trials via online technologies have failed. Howard stated, “We have the capability to assess patients in real time because we manage health records for over 110 million patients. Effectively identifying eligible patients through stringent exclusion criteria has long been challenging for both healthcare providers and trial sponsors. With more than 300,000 daily visits, all data must be leveraged to match patients with clinical trials.”

Howard believes this is a win-win partnership for all parties involved: patients seek new therapies, physicians look for suitable candidates, and Practice Fusion generates revenue in the process.

Financing Status

Among the 14 internet healthcare companies most likely to go public in 2015, Practice Fusion was the company with the highest number of funding rounds and the largest number of institutional investors. Practice Fusion underwent a total of 12 funding rounds, with participation from 31 venture capital firms, raising over $151 million in total.

Practice Fusion raised a total of $7 million in its first three funding rounds prior to 2011.

In April 2011, Practice Fusion announced that it had raised $23 million in Series B financing, led by the venture capital firm Founders Fund.

In September 2011, Practice Fusion secured $6 million in funding. The round involved nine investors, led by Founders Fund, Greenspring Associates, and Morgan Stanley Investment Management.

After undergoing two rounds of investment in 2012, Practice Fusion secured its third investment of the year in June—raising $34 million from the hedge fund Artis Ventures in its Series C financing round. To date, Practice Fusion has raised a total of $64 million.

In September 2013, Practice Fusion secured $70 million in Series D financing, led by the venture capital firm Kleiner Perkins, with participation from Venrock and Deerfield Management.

In December of the same year, Practice Fusion secured another $15 million in Series D funding, led by Qualcomm Ventures.

Subsequently, Practice Fusion underwent two additional rounds of financing in August and October 2014, respectively; the specific amount raised in the former round was not disclosed, while the latter round secured $2.5 million.

After going through so many rounds of financing, it is time to go public.

Team Status: Preparing for IPO

According to The Wall Street Journal, Practice Fusion is preparing for an initial public offering (IPO). The company has added Alan Black, a board member with extensive experience in startup IPOs, who will serve as the Chairman of Practice Fusion’s Audit Committee. Mr. Black previously served as Chief Financial Officer at Zendesk, a SaaS provider that successfully went public last year. He will retain his executive role at Zendesk while joining Practice Fusion.

“We believe Practice Fusion is the digital health company with the greatest potential to go public. We are actively recruiting talent in preparation for our IPO, including appointing Alan to the Board of Directors,” said Howard, CEO of Practice Fusion. “A strong audit committee is crucial during the initial public offering process.”



In July 2015, Practice Fusion also announced the appointment of Matt Ackley as Chief Marketing Officer, Dorothy Gemmell as Senior Vice President of Life Sciences Practice and Strategic Partnerships, Tim Rauschenbach as Vice President of Customer Service and Support, and Dave Caldwell as Senior Vice President of Enterprise Solutions.

Besides Alan Black, the other individuals also boast impressive credentials. Matt Ackley previously served as Vice President of Advertising and Online Marketing at eBay for five years, and as Managing Director of Media and Market Development at Google for two years.

Dorothy Gemmel was formerly the President of Havas Life New York and served as Senior Vice President at WebMD for thirteen years.

Tim Rauschenbach previously served as Director of Customer Service at UnitedHealth Group, the largest commercial health insurance company in the United States. Prior to that, he held the position of Vice President of Global Customer Service at Amazon.

Dave Caldwell previously served as Vice President of Sales and Marketing at Transcend Insights, a wholly owned subsidiary of Humana.

The Associated Press believes that by adding senior executives from the technology and healthcare sectors to its core leadership team, Practice Fusion has further strengthened the momentum for sustained growth and forward progress, which is conducive to achieving its long-term business plan.

Steve Filler

Practice Fusion’s expansion efforts have not slowed. In December 2015, Practice Fusion announced the appointment of Steve Filler as Chief Operating Officer, responsible for strategic business planning at Practice Fusion. Previously, Mr. Filler served as an executive at medical groups and hospitals, providing services to healthcare institutions such as Kaiser Permanente, Stanford University Hospital, and Alliance Health Partners, helping them improve their clinical performance.

Practice Fusion believes that Steve Filler’s consulting experience in the healthcare industry will expand Practice Fusion’s growth strategy and continue to foster partnerships with key players in the healthcare ecosystem.

The Secret to Success

To summarize the secrets behind Practice Fusion’s success, several factors are evident: aligning with policy developments, adopting a free-of-charge strategy, and unlocking the value of big data.

To this day, many people still speak with fascination about Practice Fusion’s legendary turnaround, achieved through a “free” model. However, Howard believes that while offering services for free is certainly a strong incentive for healthcare providers, what has sustained Practice Fusion’s success is its product, which provides substantial support and services to end users. This is also why Practice Fusion has become the largest cloud-based electronic health record (EHR) platform on the market.



Howard stated that Practice Fusion enjoys an excellent product reputation in the electronic health record (EHR) market. Its interface is streamlined and intuitive; as a cloud-based platform, it requires no software downloads, allowing users to register and begin documenting patient records within minutes. This offers significant appeal to users. While many may initially remain skeptical, upon their first login, they can immediately access the full suite of features. These capabilities are so self-evident that they effectively sell themselves, prompting users to activate laboratory services, e-prescribing, and other offerings in a very short time.

Focusing on perfecting its own products is another key to Practice Fusion’s success. From a competitive standpoint, Practice Fusion simply releases more features each month than its rivals in the market. For example, Practice Fusion updates its product every two weeks.

Currently, Practice Fusion has more than 600 partners, including hospitals, independent clinical laboratories, and imaging centers. Practice Fusion integrates these partners into its electronic health record (EHR) platform. Howard candidly stated, “The network effect this creates means that the better the product becomes, the more users will engage with it daily. This dynamic has little to do with what our competitors are doing. Following the integration of laboratories, pharmacies, and imaging centers, we added functionalities this year such as clinical trials, patient adherence education, and electronic prior authorization—all measures that enhance our product.”