Allscripts Bets on the Cloud with Practice Fusion Purchase

Around this time 2 years ago, Practice Fusion seemed to besitting on a goldmine. There were rumors that the San Francisco-born electronic health record (EHR) company, which was among the first to embrace cloud-based hosting, was exploring an initial public offering in the 10-figure range. For years, venture money had poured into the company: it raised over $150 million in a series of successful funding rounds between 2011 and 2014.

Now, it is property of Allscripts. The purchase was announced yesterday for a price of roughly $100 million, subject to adjustment.

Allscripts holds the 4^th-largest share of the EHR market according to estimates. It is unknown to what extent this acquisition will boost its standing, though the company said in a statement that Practice Fusion’s arrangements and technologies would “complement and round out” its ambulatory clinical portfolio. The newly-purchased firm supports 30,000 ambulatory centers nationwide, representing about 5 million monthly patient visits.

Practice Fusion’s technology was well-respected in small practices, earning numerous awards and high rankings for value to independent providers.

This isn’t the first time that Allscripts has acquired a once-leading EHR provider—not even in the past year. As recently as 2016, McKesson was one of the top 5 vendors in the field, but in 2017 it sold its health records and revenue cycle operations to Allscript for $185 million. That deal, which doubled the company’s reach, was finalized in October of last year.

Across the EHR market, companies are cannibalizing one another and charging towards the cloud. In November, the company directly ahead of Allscripts in market share, Meditech, announced the launch of a simplified “Meditech as a Service” cloud-based platform in hopes of capturing business from rural and critical access hospitals, which have typically lagged behind larger systems in EHR adoption.

The Practice Fusion purchase is meant to help Allscripts cast a similarly wide net, though their focus will be on small physician practices.

“Practice Fusion's affordable EHR technology supports traditionally hard-to-reach independent physician practices, and its cloud-based infrastructure aligns with Allscripts forward vision for solution delivery," the EHR vendor’s President, Rick Poulton, said in a statement. "We believe this transaction will directly benefit Practice Fusion clients, who will now have access to Allscripts solutions and services.”

An interesting wrinkle in the cloud-based EHR story has to do with CliniComp, a smaller provider, and its 1999 patent on patent remotely-hosted enterprise healthcare information management systems. One of the provisions of US Patent No. 6,665,647 grants CliniComp founder Chris Haudenschild rights to certain enterprise medical technologies in which “information is accepted into the Internet at one location, routed through various Internet servers within the cloud, and then received at a final location.”

Last month, the company filed a suit against Cerner for patent infringement. Though the wording of the complaint would likely apply to all EHR vendors that base services on the cloud, Cerner seems to have been chosen because it won the Department of Veterans’ Affairs EHR overhaul contract, which CliniComp had wished to bid on. The merit of the case could have major implications for the unpredictable EHR market.