SAN FRANCISCO, Calif. – Practice Fusion is best known for its free web-based electronic medical record, but the startup’s goals are far more ambitious.

Speaking at HealthBeat, VentureBeat’s conference, CEO Ryan Howard said the decision to offer the health record to doctors for free is “somewhat of a Trojan horse.”

“We have all this patient information that doesn’t reside anywhere else,” said Howard. The product is currently used by more than 150,000 doctors and tracks 64 million patient records, he claimed.

Aside from mining the data contained within its health record, Practice Fusion also helps doctors with calendaring, scheduling, and billing. The goal is to provide a customer relationship management (CRM) tool for physicians.

On the consumer side, the company launched a service last month, dubbed Patient Fusion, now used by 27,000 doctors. Already, consumers can use it to book appointments and peruse 1.5 million doctor reviews. In the month of April alone, the company offered 3 million open appointments.

That’s a lot of data to work with.

But the sensitive patient information is stripped of personally identifiable factors, and will not be sold to pharmaceutical companies. “We don’t sell data sets to payers,” Howard stressed.

Instead, the goal is to use the data to prevent miscommunication between doctors and patients. Howard observed in a recent interview that accessing and mining patient information can save lives. “We can recommend drug therapies based on their popularity [with previous patients],” he said, and claims there are 200,000 avoidable deaths a year because “data is simply not shared.”

By being among the first to put data in the hands of patients, Practice Fusion hopes to add more doctors to its health record. By marketing products to patients, the company will augment its brand with hospital decision-makers.

Howard revealed that the company is making “eight digit” revenues each year, and plans to go public in the future — but not in the coming year. Practice Fusion still has a long way to go; “we’re only at ten percent of our potential,” Howard revealed in an interview.

Photo credit: Michael O’Donnell/VentureBeat

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An ambitious startup, AirStrip has a plan to circumvent the tangle of incompatible systems currently clogging up the free flow of information in health care.

Believe or not, it’s an iOS app.

That’s simplifying quite a bit, but the app — and the mobile devices on which it runs — are a powerful tool for making health care data easy to share for doctors, nurses, and similar professionals.

“Look at what the iPhone did for the music business, and retail, and banking,” said Bruce Brandes, executive vice president at AirStrip, onstage today at VentureBeat’s HealthBeat conference. AirStrip aims to make the iPhone do the same thing, only in health care. “Health care is arguably the industry most in need of a ‘big bang’ disruption.”

The crux of the problem, according to Brandes: It’s “humanly impossible” for doctors to get all the information they need from the many sources of data available to them. Electronic medical record systems (EMRs) and electronic health records (EHRs) are often built on proprietary systems and lack transparent interfaces for making them interoperable.

AirStrip started by focusing on a seemingly simple problem: Making it possible for doctors and nurses to share waveform data (heart rates and blood oxygenation levels, for instance) with one another without having to be in the same room — previously a difficult problem. The company initially focused on perinatal care.

“The sad truth is babies are injured many times because of that communications breakdown,” Brandes said.

Once AirStrip figured out how to coordinate that data exchange, it was able to expand the areas of medical data that it consolidates into its apps. It now incorporates vital signs, lab results, imaging, critical medical events, and more.

Dignity Health, one of the country’s largest healthcare providers, is using AirStrip.

“We need something that is going to allow us to communicate across system, that can layer on top of the other EMRs, otherwise we’ll never be able to exchange information like we need to,” said Richard Roth, a vice president at Dignity.

Dignity tested AirStrip with a pilot deployment at a rural healthcare location first, then followed up with an urban pilot, then jumped right in to a large-scale deployment.

An entrepreneur in the audience asked about AirStrip’s experiences working with EMR providers, particularly Epic, the market leader.

“Some vendors are more open than others, and as we know with Epic, they’re a hard nut to crack,” Brandes said.

However, Brandes noted that even Epic will integrate its data with other systems in response to customer demand, as Epic CEO Judy Faulkner noted in a recent Forbes interview.

With Dignity Health and other large health care providers who number among AirStrip’s clients putting pressure on EMR vendors, Brandes said, the walls are coming down.

“Even the closed ones are being forced to work with us,” Brandes said.

Top photo: Bruce Brandes, Airstrip. Photo by Michael O’Donnell/VentureBeat

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Janice Nicholson is CEO of i2i Systems.

As someone who has spent over 20 years focusing on the needs of healthcare organizations, I have experienced firsthand their unique challenges while using technology to improve patient outcomes. I think we have a major dilemma when it comes to health IT and it’s time we call it out.

First, let’s get right to the heart of the matter: What factors limit health IT’s ability to support quality measurement and quality improvement?

My response is based on field experience in supporting hundreds of clinics and practices who are using more than 30 different Practice Management (PM)/Electronic Health Record (EHR) systems. I would like to tell you that we have figured out why health IT investment has not resulted in more dramatic improvements to outcomes of care, and that we have the solution — but we do not.

What I can share with you are three of the top challenges we have experienced in helping organizations realize the benefit of health IT adoption.

Limitations within EHRs yield roadblocks

The first challenge is that of standards and interoperability. EHR makers claim the records interoperate, but what they don’t say is at what level. Much of the data in EHRs about patients is customized, unstructured data. Even within the same EHR, templates allow a patient’s medical data to be stored in different locations of the database using different representations. This means that while you think you may be accessing information at one end of the EHR, the information you really need might be on the other. This lack of EHR vendor standardization and inability/unwillingness to share customized, unstructured data cripples efforts to address Meaningful Use (MU) and severely limits the analytic capability of EHR data.

Health IT capabilities are behind the times

The second challenge is that EHRs do not fully support MU requirements. Our current health technology isn’t able to analyze data in a way that would allow us to support tactical, operational, and strategic improvements in public health management. This primitive state hampers organizational leaders, management, and even care teams from proactively monitoring and improving performance. To meet requirements of MU Stage 3, organizations need tools that will support long-term, sustainable change.

A simple example of this is HbA1c testing for diabetic patients. Evidence-based guidelines suggest that A1C screening for a diabetic patient should occur at least twice during a year-long period. This simple adherence tracking for one patient becomes complex very quickly when managing population health for thousands of diabetics.

A lack of incentives creates stagnancy

The third challenge is lack of incentives to achieve higher levels of performance. We often see organizations drawn to our solutions mainly for required reporting to payers. We encourage organizations to leverage our tools to their fullest, but sadly, many are satisfied with threshold performance since there are not enough incentives for them to dive deeper into what’s available out there. This speaks to the lack of a data-driven culture incented to measurably improve health outcomes.

Challenges provide the opportunity for solutions

Despite all these challenges hindering the healthcare industry’s ability to successfully move forward in using technology to their advantage, I see various opportunities.

First, Health IT vendors must provide clinics open access to their data, and remove barriers to standardization and interoperability. Performance can then be measured in a reliable way and shared across the health system.

Second, we need to face the reality of what EHRs currently deliver. There is no single, comprehensive, all-inclusive Health IT solution that will meet everyone’s needs today and in the future. Rather, the real solution lies in cultivating a healthy and diverse Health IT ecosystem. We have to help providers understand the intelligence tools they need so they can plan and budget for what will be required to monitor, improve and sustain health outcomes.

Third, we need to increase the percentage of revenue directly related to pay-for-performance. Organizations must be incentivized for behaviors that drive change. This will naturally catalyze the quality life cycle that results in high performance.

We can be optimistic if we address these opportunities. Success is within our grasp and it can come at a price that you, me and the rest of the nation can afford.

Before founding healthcare software provider i2i Systems, Janice Nicholson worked as a software engineer and played a major role in developing a patient management system for private practice. She has managed over 10 major product releases; and, prior to its acquisition by WebMD, she served as the vice president of product engineering at HealthPro Solutions.

Hospital image via Shutterstock

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DocuTAP helps urgent care clinics digitalize their operations to make them more efficient and less reliant on paper. The software integrates electronic health records (EHR) and “practice management” technology so all the information and tools needed to operate an efficient practice is one place. The platform is accessible on tablets so clinicians can use it on-the-go. DocuTAP also features automated and customizable tools so each clinic can tailor the software to their needs as well as billing services.

In a statement issued this morning, Steve Kraus of Bessemer Venture Partners said that urgent care is one of the fastest growing sectors within the healthcare marketplace. The healthcare industry as a whole is undergoing a digital transformation. The U.S. government mandated that doctors need to be fully transitioned to electronic records by 2014, and companies are raising large amounts of venture capital to help them do that.

In November 2012, Hello Health raised $11.5 million and companies like CareCloud (backed by $20 million) and Practice Fusion (backed by $64 million) are experiencing significant growth. The market for electronic medical records is estimated at between $6 billion and $10 billion.

DocuTAP stands to capitalize on this transition as well, all the way from Sioux Falls, South Dakota. The company was founded in 2000 and this marks its second round of funding. Bluff Point Associates led the first round of $12 million in March 2012. This financing will be used to increase market presence, accelerate sales, and continue to improve the products.

Photo Credit: Shutterstock

Qpid believes it can make electronic health records “something clinicians love” and not something they try to avoid. The company received $3 million in funding today to come to doctors’ aid.

The Qpid says that this is an “early finance round” provided by Matrix Partners, Partners Innovation Fund, Cardinal Partners, and Massachusetts General Physicians Organization.

The company’s technology looks as electronic health records and analyzes them. It then reorganizes this information into a format that humans can easily read and understand on one online dashboard. Qpid says that the data becomes “actionable” and helps increase productivity for healthcare practioners in 15 different departments across the hospitals in its network. Currently, Qpid has 5,000 healther professionals already signed up.

Cardinal Partners managing general partner Brandon Hull says they believe that the service will eventually help improve patient safety given that Qpid makes it easier for doctors to get quick information on a patient

The company is headquartered in Boston and launched in February 2013.

Doctor image via Shutterstock

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CareCloud, a company that offers cloud-based electronic health record software, says it tripled its growth last year — helped by the U.S. government mandate that doctors be fully transitioned to electronic records by 2014.

Founded in 2009, the private Miami, Florida company told VentureBeat that its expects to see its revenues triple again this year. The company wouldn’t specify exact revenue for 2012, but said it was in the range of $8 million to $10 million.

CareCloud is a great example of the technology revolution that is finally hitting health care. (We’re focusing on the most disruptive of these trends at our HealthBeat event in May, titled: “Smart Doctors, Smart Patients.”)

The market for electronic medical records (EMRs) is estimated at between $6 billion and $10 billion, and upstarts like CareCloud are shaking it up with new technology. CareCloud helps doctors move their records over to well-designed, web-based dashboards — while keeping it all stored on the cloud and accessible on devices like iPads and tablets.

Richard Close, an analyst with investment bank Avondale Partners who covers the EMR industry closely, is so impressed by CareCloud’s user interface and intuitive workflow that he likens it the company’s software to a morph of “Facebook on the iPhone.” See an example of CareCloud’s profile screenshot below.

CareCloud, which is built on Ruby on Rails, is going up against older, entrenched companies like Allscripts, Cerner, Siemens, Epic, McKesson, and GE — most of them still offering antiquated, non-cloud systems — but which jumped on the electronic record trend well before companies like CareCloud were even founded.

These companies have enjoyed a significant portion of the $19 billion in government subsidies, which began getting doled out in 2009. The subsidies are earmarked for doctors to help them make the move to electronic records. But those doctors often chose the most established companies, even if they had outdated technology. The biggest of the vendors benefited from significant lobbying, and other ties with government and U.S. Congress.

However, CareCloud has a big advantage over these other vendors, because it charges doctors only in the low single-digit thousands for implementation. And because it is cloud-based, it can update its software automatically, so doctors can stay on top of complex, fast-moving regulation and compliance mandates.

Legacy vendors typically charge around $30,000 per doctor for implementation and then more still for subsequent support and upkeep. They’re also often more difficult to integrate with other, emerging technologies. Albert Santalo, the founder and CEO of CareCloud, likens the older players to the “walking dead … it’s a fight among dinosaurs.”

Not that this is a slam dunk for CareCloud. Spurred by subsidies, many of the largest hospitals quickly moved to embrace legacy systems like Epic, which offer EMRs with just about everything most need, like practice management software, billing, and compliance. And once implemented, these systems are difficult to rip out, if only because hospital administrators are embarrassed to admit they made a mistake with their original selection. And doctors practicing in surrounding regions find it’s easier to settle on these same system, too, for ease of mind that they’ll at least integrate well with hospital records. Many doctors don’t have time to research technology, so they are hesitant to bet on newcomers.

Take, for example, the fate of Athenahealth, a company that trail-blazed the way with a cloud-based EMR in 2006. The company has grown quickly and boasts a market value of around $3 billion. But it only enjoys about 4 percent of market share, according to some estimates, and has faced problems breaking the biggest strongholds of legacy players: large hospital systems that are resistant to change. Recently, Avondale’s Close downgraded Athenahealth, saying he was concerned about competition.

Most of the industry’s new business is coming from the small practices that were slower to make the move to electronic records in the first place. Only about 75 percent of the industry’s doctors have made the transition to electronic records so far, meaning about 25 percent of the market is still in play by 2014, according to Avondale’s Close.

That’s where CareCloud comes in. It offers an all-cloud system that’s even more flexible than Athenahealth’s by offering doctors the capability to integrate parts of it more easily with their existing vendors. For example, aside from its EHR software, Athenahealth offers a “practice management” software  that requires doctors to use the entire package — practice management, billing, collections, etc. CareCloud, however, allows them to pick and chose among components of its practice management software. This makes it easy for large hospitals and smaller practices to make a switch. And this is where CareCloud is having a field day, said company spokesman John Hallock. Up to 17 percent of practices are considering making a switch in their EMR system by the end of this year, according to a survey by Black Book Rankings.

Take the Miami Children’s Hospital system. It wasn’t happy with its internal billing system, and it didn’t want to entrust it to a legacy vendor that some of its practices were using already: Cerner. So it chose CareCloud, which offered to handle its billing, but also allowed Miami to keep its other Cerner implementations in place. Miami couldn’t select Athenahealth, which would have required ejecting Cerner functionality that Miami Children’s was happy with. Avondale Partners analyst Close agrees this is big for CareCloud: “For CareCloud to go in and say, ‘You don’t need to rip that system out, we’ll interface with it,’ that’s an advantage.”

CareCloud isn’t the only cloud-based EMR vendor showing significant growth. Practice Fusion is another company generating buzz. It has offered a free medical record system, deciding it would be better to attract doctors that way, and then support the site through advertising. It has raised $64 million. However, Practice Fusion doesn’t offer a fully integrated billing or practice management system like CareCloud does.

CareCloud has received more than $20 million in a first round of funding from Intel Capital and Norwest Venture Partners in 2011, but it is now raising another round of capital.

In a statement this week, CareCloud said it has more than 2,000 customers (hospitals, doctors) in 45 states, and reaches 4.5 million patients. Separately, the company told VentureBeat it will be debuting its latest software — featuring better workflow functionality for doctors — at the HIMSS conference New Orleans on March 5.

[Update: Corrected the reference to amount raised by Practice Fusion, as well as explanation of its business model]

CareCloud Electric Health Record

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HealthBeat 2013 is a new conference showcasing how technology is transforming health care. We'll explore how IT is driving out inefficiencies on the hospital, practice, and patient levels. Check out full event details here, and register here.

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Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

This is a guest post by investor Robert Abbott

In a field where handwriting notes on paper charts and managing large rooms filled with filing cabinets have been the accepted practices for decades, healthcare providers are being deluged by a perfect storm.

Not only do they have to grapple with implementing new technology and converting paper files to digital format, they are simultaneously dealing with how to secure this growing cache of electronic data while complying with complex corporate governance policies and federal mandates.

Despite these challenges, healthcare providers are finding a silver lining in secure cloud services that help them address the key technology, regulatory and privacy issues they face.

The market and legislated demands created by 900,000 healthcare providers migrating to electronic records has resulted in a $25 billion healthcare IT market, which is expected to grow more than 24 during 2012-2014, according to global market research company RNCOS.

But because healthcare is about a decade behind other industries in the adoption of IT technologies, this perfect storm is giving healthcare companies a chance to leapfrog into cloud-based solutions designed to solve their unique needs.

Cloud adoption is still in its infancy in healthcare with early adopters representing only about four percent of the market. However, there is great potential for cloud technology. According to a report from research firm Markets and Markets, the cloud computing market in healthcare is estimated to grow at 20.5 percent from 2012 to 2017. [At VentureBeat's CloudBeat conference, which begins tomorrow, healthcare is going to be a major theme; providers will discuss how they're adopting the cloud, and healthcare companies will explain how it's also helping them use novel "big data" strategies.]

Given these growth prospects, there is a sweet spot in this market for cloud service providers that can effectively combine IT expertise and experience dealing with the unique privacy, security and compliance demands of the healthcare market.

Of particular interest are cloud providers that offer automated solutions to replace traditional paper-based processes, enable better connectivity and communications between patients and their providers, and that support the entire healthcare supply chain.

Some of the leading cloud providers in healthcare today include CareCloud, ClearDATA Networks Inc., athenahealth, ADP AdvancedMD, PracticeFusion, RemitDATA, and TeraMedica Inc. For example, Baptist Health South Florida, the largest not-for-profit healthcare organization in the region, recently announced it is subsidizing CareCloud’s integrated electronic health record and practice management solution to more than 2,500 community-based physicians to improve patient care. While ClearDATA, for example, is providing its HealthDATA Cloud Platform to Dignity Health, the fifth largest hospital provider in the nation and the largest hospital system in California.

“By moving various healthcare infrastructure and applications to ClearDATA’s cloud platform, Dignity Health has been able to reduce its IT costs while increasing security and efficiency and greatly decreasing the time it takes to deploy a solution,” said Darin Brannan, ClearDATA’s president and CEO. “We also improve reliability – in terms of uptime and redundancy – and our state-of-the-art cloud systems provide greater performance over legacy hardware and networking architectures, which is typically not well-suited for the hospital’s growing data requirements.”

During CloudBeat 2012, on Nov. 28 at 10:15 a.m., Brannan and Scott Whyte, Dignity Health’s vice president of IT Connectivity, will join VentureBeat Executive Editor Dylan Tweney to talk in more depth about the challenges that healthcare companies face in their transition to electronic medical records and new IT solutions, and what they need to consider when adopting a cloud solution. During the session, they’ll also share more details about how Dignity Health has employed ClearDATA’s innovative solutions to strategically upgrade select components of its IT infrastructure, prepare for personalized care models, comply with mandates and ensure the security and privacy of patients’ electronic records. 

Robert Abbott is a general partner at Norwest Venture Partners (NVP), where he focuses on a wide variety of investment categories including mobile, cloud and IT infrastructure. NVP is an investor in ClearDATA and CareCloud. 

Navigating the storm image // Shutterstock

QuantiaMD, the website and mobile app for doctors to brainstorm and collaborate on tricky cases, has raised $12 million in venture capital funding.

The Waltham, MA. based health IT startup will use its funding to engage more physicians, and add them to the growing network. Over 160,000 physicians are currently registered — representing about 25 percent of doctors in the U.S.  The technology is secure and encrypted — so it’s safe for doctors to discuss sensitive patient information and offer practical tips.

To remain at the top of their field, doctors need to stay up-to-date on the latest research.. In they past, they communicated through fax and email. It wasn’t an easy task for the founding team to change this behavior, but the persistence is paying off.

“We are replacing antiquated methods, and therefore it takes time to encourage adoption,” said Eric Schultz, the company’s CEO, when asked about the greatest hurdle to growth.

The company is showing signs of traction with its target market: Physicians that regularly use the system spend an average of 45 minutes per week sharing their insights, and asking for clinical advice from the pool of over 500 experts from major medical institutions.

Once they sign-up, they can set up a profile page, review research, access relevant discussion forums, and privately reach out to other physicians. Doctors are keen adopters of tablet devices and smartphones — about third of them exclusively use the mobile app.

QuantiaMD makes it easier for hospitals, pharma’s and health insurance providers as a means to reach doctors — which is key to the company’s business plan. “Most health plans and hospitals still rely heavily on homegrown portals, fax and mail to communicate with physicians,” said Schultz. With the funding, the company will also invest in sales and marketing efforts to reach the top pharmaceutical companies. To succeed, it will need to beat out competitors like Doximity, the “Facebook for doctors” and Sermo, an online community for physicians.

The funding round was led by existing investor, Fuse Capital.

Top image via Shutterstock

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Avado, which just launched at TechCrunch Disrupt, aims to turn patients from passive health care receivers into active health care partners via its patient relationship management system. Think of it as Mint for healthcare.

The system provides dashboards patients can use to track their health history, including medications, immunizations, lab results and surgeries, and to record vital statistics like weight and blood pressure. Patients can also receive alerts from health care providers to remind them to take medication, track vital signs or attend appointments.

To those familiar with ehealth and mHealth applications, there is is nothing radically new here. Avado’s system is a mashup of electronic health records, remote monitoring and self-tracking. But it does package multiple features into a single system suitable for small to medium-sized clinics and other healthcare practices.

Continuous care is certainly the future. The healthcare system is still designed to manage acute conditions even though chronic diseases like diabetes and heart disease consume three quarters of the healthcare budget in the U.S. today. Continuous monitoring of patients with chronic diseases has been shown to reduce mortality by 35-56 percent as well as lowering hospitalization time and numbers of doctor visits. All that saves money in a country where healthcare spending is growing 2 percent faster than GDP each year.

Avado’s business depends on convincing healthcare providers to adopt the system. As a result it’s giving it away for free for the first 12 months. The company will charge later for more advanced features and services. Healthcare is a slow-moving industry, and there are complications such as the fact that care-givers have to maintain the privacy and security of patient information in accordance with HIPAA regulations and the more recent HITECH act, which applies specifically to electronic health data. Avado’s site doesn’t specifically list the security features of the system.

Avado was founded in 2010, has 6 employees and is privately funded.

So it’s encouraging to see the federal Medicare program stepping up with a pilot program to offer higher reimbursements to doctors who go paperless in their record-keeping. The program will pay doctors extra when they order prescriptions or submit lab tests online, with the highest payments going to the most aggressive users of the technology.

New digital-record systems can cost $20,000 to $40,000 to implement, but the cost savings of such systems tend to flow to insurers and hospitals, not to physicians themselves. The new Medicare program, which will involve about 1,200 doctors, could boost reimbursements to these doctors by several thousands of dollars a year. Those funds, Medicare insists, will be recouped through improved care and greater prevention of chronic conditions.

Whether or not that’s true — and I suspect such savings will only materialize over the long term — it’s great to see Medicare tacking the financial disincentives associated with electronic-record adoption head-on. Now, if they can just expand this program as quickly as possible — and perhaps offer some standards guidance along the way, to ensure we don’t create an electronic Babel of incompatible systems — then maybe we’ll finally be getting somewhere.

No sooner does the NYT run a significant piece on health-info efforts at Google and Microsoft than someone decides to leak the “preview” of the site to Google Blogoscoped. (Site author Philipp Lenssen confirms that it wasn’t an authorized disclosure.)

Based on the ten screenshots available at Lenssen’s site, this preliminary version of Google Health is indeed laser-beam focused on creating a personal electronic health record — a digital version of the paper files your doctor probably keeps in one of those vertical filing cabinets. Given the unlikelihood that users will be able to simply upload their information from their doctor — as I seem to be repeating a lot these days, fully three-quarters of U.S. doctors still keep medical records on paper — the initial emphasis is on getting users to enter as much of their personal information as they feel comfortable providing.

To that end, the early version of Google Health offers the standard spare-but-clean Google interface. As you can see from this screenshot, the section is divided into “Profile” and “Medical Contacts” tabs. “Profile” is where you’d enter your medical details — everything from straightforward descriptive details (age, sex, height) to immunizations to current medications, surgeries, and family history. Presumably Google will refine some of these options over time — this screenshot (duplicated below) of the “Conditions and Symptoms” tab, for instance, offers choices such as “head and neck angioedema” and “head and neck carcinoma,” which ordinary people aren’t likely to understand unless they already have these conditions. (Angioedema is a fluid-based swelling of the skin and mucus membranes, while a carcinoma is a type of cancer.)

One of the cooler features hinted at in this preview is a customized “health guide” the site will put together once you’ve entered enough information. As the site text reads, “When you add some information to your profile, Google Health will search trusted medical sources and create a health guide targeted for you.” In other words, Google plans to offer some preliminary diagnoses for users who trust it with their medical details. This part of the site is currently built in collaboration with SafeMed, an automated-diagnosis startup that we covered briefly here. It will be interesting to see how medical authorities react to this sort of automated, personalized diagnosis, as it might skirt fairly close to the actual practice of medicine in some states. The preview site does urge users to “[b]e sure to discuss questions about your medical care with your doctor or medical provider before making changes.”

The remainder of the preview site is fairly straightforward so far as health information goes. The “Medical Contacts” page turns out to be a blank box that offers the option of searching the “Google Doctor Directory” to add your current physician or physicians. There’s no sign as to whether that directory actually exists or not, or whether it will be compiled with human oversight or automatically assembled in the fashion of other Google directories.

Overall, it seems a solid but unremarkable effort, one that probably wouldn’t even merit much attention were it not from Google. Of course, that makes all the difference, since a groundswell of patients who want their doctors to use Google medical records might actually encourage more doctors to adopt electronic systems.

In the meantime, for comparison, you might check out some other early efforts to do something similar, such as the OpenHealthRecord or the more sophisticated but less user-friendly HealthCapture PHR.

UPDATE: Tom Salemi of the In Vivo Blog has an even more dyspeptic take on both the NYT story and the Google Health preview — not to mention a decent joke based on one of my favorite bands — here.

UPDATE REDUX: Another underwhelming review is up at MedGadget, while at Over My Med Body!, Graham Walker — a third-year Stanford med student — rails that “Patients should not control their medical record,” and then explains why. The comments to Walker’s post further expand on the issue of just how good an idea it is to let people enter their own medical information, and whether that should complement doctor-provided information or even override it if the patient so chooses.

Venture capitalists are throwing scads of money at online health-information startups, figuring that at least one of them might eventually emerge a powerhouse in community-building, health-related search, electronic medical records, or even some combination of the three. Today, the NYT’s Steve Lohr weighs in to argue that the biggest battles in this space might just involve the two familiar names Google and Microsoft.

Of all these opportunities, electronic health records probably have the greatest potential to transform and improve U.S. healthcare, although they’ve so far made little headway in our fragmented medical system. Lohr covered that issue far more thoroughly in this June piece. Here, his Google-Microsoft story is kind of heavy on atmospherics and light on detail, and devotes lots of space high up to the looming clash between online titans, consumer fears about trusting big companies with their health records, and the opportunity created by the slowness of doctors and healthcare providers to adopt electronic records themselves.

When the story does get down to details, however, they’re fairly interesting. Google sees creating, maintaining and providing access to electronic health records as the core of its online health strategy. A prototype of Google Health that Lohr viewed takes a consumer-oriented tack, promising people the ability to control their medical information and to give access to “health care providers, family members or whoever they choose.” Additional pages include:

a “health profile” for medications, conditions and allergies; a personalized “health guide” for suggested treatments, drug interactions and diet and exercise regimens; pages for receiving reminder messages to get prescription refills or visit a doctor; and directories of nearby doctors.

Microsoft, by contrast, seems to be taking its classic technology-first approach. Steve Shihadeh, general manager of Microsoft’s health solutions group, emphasizes the “grand scale” that will be required to handle “data storage, software and networking” necessary to implement a workable electronic-records system, and brags that Microsoft software is already present in hospitals, clinical labs and doctors’ offices and that the most popular electronic-records systems already in place were also built with Microsoft software and programming tools. It’s not clear to me if that’s a boast or a threat, actually, although it’s sure got a familiar Microsoft cadence to it.

Shihadeh adds that Microsoft is building a “broad consumer health platform” and dismisses electronic medical records as “just scratching the surface.” Microsoft’s health effort is due to be launched this fall, while Google’s has apparently been put off until next year.

It’s entirely possible that both giants may fall on their respective faces, of course. Neither has made much headway in health-specific search, an area where companies like Healthline have done well, although the NYT does note a recent Juniper report that found 58 percent of people looking for online health information started with a general search engine like Google.

More to the point, Lohr fails to even raise two important questions. The first is exactly how much control these companies envision handing consumers over their electronic health records. Could, for instance, an individual on the Microsoft service pick up her records and take them to Google? Maybe it’s passé to think of tech giants trying to “lock in” their customers with proprietary formats in this Web 2.0 age, but Microsoft’s seeming inability to stop touting its software ubiquity can’t help but make me wonder what the Redmond giant has in mind. Bear in mind also that competing health-record setups at hospitals and doctors’ offices aren’t particularly compatible with each other, either — another factor that has slowed adoption.

The second question is what, if anything, Google and Microsoft plan to encourage the healthcare system itself to adopt electronic records. Consumers, for instance, might embrace either service — or both — and yet have nowhere to take their nifty new portable records, simply because three-quarters of all doctors don’t use them. Fixing that means finding a way to overcome the financial disincentives most small medical practices face in installing and maintaining electronic-record systems, and that could tax the resources — not to mention the patiences — even of these tech titans.

UPDATE: Google Someone apparently took the occasion of the NYT piece to “preview” some elements of Google Health on the Web. See, for instance, these screenshots and related descriptions at Google Blogoscoped.

Dan Kaplan also has a post on Google’s nascent health initiative up at the main VentureBeat page, although he’s considerably more optimistic about the business opportunities here than I am. Medicine does move a lot more slowly than the tech industry, or you’d have considerably more than 25 percent of doctors’ offices wired for electronic health records already. What’s more, the expansion in healthcare’s share of GDP is almost all slated to come in the cost of treatment and compensation for healthcare workers, with relatively little slated for technology. Tech companies may yet find a way to make money from the healthcare sector, but outside a few niches, the pickings have been pretty slim so far.

The catch is that biogenerics supporters want to attach this langauge to a reauthorization of the FDA’s user-fees act, the awkwardly named PDUFA, which has to pass by September to keep the FDA operating smoothly. The Senate’s version passed in May, whereas the House just approved its version yesterday — but didn’t include a biogenerics pathway. The senators want to add it to their version of the bill, which has to be reconciled with the House version in a conference committee. But key House members, including Energy and Commerce Chairman John Dingell, a Michigan Democrat, appear likely to object, since they haven’t had a chance to weigh in on the provision.

The upshot: Turf wars between the houses of Congress may cost us our best shot at biogenerics legislation in some time. Tying the measure to PDUFA would be one of the best ways to sidestep legislative roadblocks that opponents and their biotech/pharma backers are likely to throw up — but the window is closing rapidly. The WSJ has more here.

Digital medical records are good for your health — or are they? One of the strongest arguements for digitizing medical records is that they’ll help prevent medical errors and improve medical care. A recent review of other studies in the journal Health Services Research gave digitized records a strong vote of confidence when it found that hospitals that switched to electronic drug-ordering systems saw a 66 percent drop in medication errors. (Such mistakes apparently kill 500,000 U.S. hospital patients every year.) Similarly, a report from the Pharmaceutical Care Management Association predicts that electronic prescribing could save Medicare as much as $29 billion over the next two years while preventing two million medication errors.

As with any technology, however, electronic records are no panacea. Another study of walk-in doctor visits found no improvement in treatment quality among practices that used electronic medical records versus those that still relied on paper. The study’s conclusion: Implementing digitized records is just the first step — doctors and medical groups still need to do a lot of work to get the most out of them.

On a related note, a Senate committee recently passed legislation that would offer subsidies to convince doctors to install digital health-record systems.

RNAi is hot, hot, HOT — Once again, it’s boom times for a new drug technology, and this time the spotlight is on RNA interference — a fascinating but largely unproven method for turning off individual genes by using a short stretch of double-stranded RNA to activate ancient gene-silencing machinery inside cells.

The party really got started last year, when Merck paid $1.1 billion to acquire Sirna Therapeutics, a fledgling RNAi company that had barely managed to move a single drug into an early-stage trial. Now things have heated up even further. Last Friday, AstraZeneca struck a $400 million deal with Silence Therapeutics. Then on Tuesday, Roche stepped up to forge a $1 billion deal with Alnylam, an early pioneer in the area.

What’s worth remembering is that no matter how promising a technology like RNAi seems, putting it to practical use almost always takes far longer and costs more than people expect in the early stages. Just take a look at the roll call of other drug technologies that have undergone similar cycles of hype and disappointment — gene therapy, antisense, therapeutic vaccines. All remain promising — but none of them worked the first time out of the gate. Even monoclonal antibodies took close to two decades before anyone could make a reasonable drug with them. Maybe RNAi will be different — but I wouldn’t bet my wallet on it.

Have cancer vaccines gotten a raw deal? A paper in Clinical Cancer Research (described here) argues that regulators and companies may be too quick to dismiss clinical-trial results if they focus on tumor shrinkage rather than long-term outcomes like survival. That may well be true, as tumor shrinkage is a notoriously bad measure of whether drugs work or not, although it’s also worth noting that a reconsideration still wouldn’t have helped Dendreon’s Provenge vaccine, since its survival data was so statistically equivocal. (Separately, the SEC has now opened an informal inquiry into Dendreon’s public disclosures about Provenge this year.)

DNA transplant “transforms” microbial species – J. Craig Venter’s group at his eponymous institute takes the honors, described here in the WaPo. Next up: Transferring an entirely synthetic genome into a DNA-less microbe to create “artificial life,” something Venter says may happen within months. Similarly, here’s the NYT on the new science of “synthetic biology.” Brace yourselves.

Does “pay for performance” improve medical care? A few weeks ago, the WSJ said no, citing a Medicare experiment. Today, the NYT says yes, citing… a Medicare experiment! I’ll have more to say once my head stops hurting.

Pre-implantation genetic diagnosis may harm fertility – Or so say the authors of a Dutch study described by the WSJ here. Several researchers seem to think the results need to be verified elsewhere before abandoning the procedure, in which a single cell is extracted from an IVF embryo for genetic analysis.

Stem cells tailor their own environments — At least according to Canadian researchers, who explored the specifics of how embryonic stem cells communicate with the cells around them. The Globe and Mail has the story.

Simple enzyme short-circuits bacterial drug resistance – Basically, it prevents bacteria from swapping the genes that confer resistance to antibiotics.

High-throughput output –

• Vermont sets up a Web site comparing pharmacy drug prices (Kaiser)
• Researchers discover molecule that may promote food allergies (BBC)
• Breast-cancer risk genes may not influence survival (WSJ)
• Congressional Democrats want to know who muzzled the former surgeon general (Bloomberg)
• Scientists identify gene linked to autism (BBC)
• Robotics help stroke patients regain function (NYT)

(NOTE: This item originally incorrectly stated that J. Craig Venter’s company, Synthetic Genomics, was involved in the research that transplanted one microbe’s genome into another. In fact, it was Venter’s own research institute, the J. Craig Venter Institute.)

You can’t swing a dead cat among venture businesses these days without hitting a new online site devoted to healthcare information of one sort or another. Over the last few months, we’ve seen a parade of major announcements — many of them big on vision but vague on particulars — from the likes of Steve Case’s Revolution Health, MedBillManager, TauMed, DailyStrength, and other sites that offer some mix of searchable health information, social networking, doctor comparisons, medical-bill management or digitized health records designed for people who want to make sure that doctors of their choice have access to their medical information. (See previous coverage of the space by Matt Marshall and Dan Kaplan here, here and here.)

The latest entrant is HealthCare.com, which just announced $6.1 million in a seed funding. The company’s site is currently an “alpha” version, according to HealthCare.com Chairman Robert Monster, but it gives you a sense of what the company plans to offer. The site’s core lies in its searchable disease and drug database, which Monster says will aggregate the “best information” on health available across some 70,000 other Web sites. HealthCare.com also plans a “symptom checker” that allows users to zero in on potential diagnoses via clickable Flash animations of the human body, and individual accounts for patients and doctors, which for patients means personalized health information and management of electronic health records, insurance information, and online prescriptions. For doctors, the site plans to provide personalized Web sites, blogging tools, some form of network for doctor-to-doctor story-swapping, and “knowledge boards, forums and surveys.”

Without question, this online-healthcare stampede indicates that venture capitalists are intensely interested in the area. It’s equally clear, at least to me, that this space is already in danger of overcrowding, since it’s difficult to imagine that any of these services can succeed unless they attract a critical mass among their desired audience, whether patients, doctors, large healthcare providers or insurers (and sometimes all four).

More fundamental, however, is the question of whether these services are really addressing pressing needs. The medical social-networking promised by the likes of DailyStrength, for instance, sounds a great deal like the sort of thing patient-support groups have offered on various disease-specific Internet sites for some time. It’s not at all clear to me what patients have to gain by re-creating those communities on a single site, since cross-talk between people with very different health problems is generally pretty rare — cancer patients and people with back problems, for instance, don’t generally have much to say to one another.

There are, of course exceptions, such as various autoimmune conditions and certain related cancers. It’s also possible that advancing knowledge of the molecular basis of disease — that is, for instance, the genetic mutations that drive particular cancers or different forms of heart disease — may eventually break apart today’s disease categories in ways that an integrated community site might be better poised to exploit. All that is still some ways off, however, and in the meantime it looks like the traditional diagnostic categories are going to hold sway.

The idea of helping patients manage electronic health records, by contrast, is very attractive, but it faces a number of hurdles that most of these companies scarcely acknowledge. For instance, the NYT recently noted that fully three-quarters of all doctors aren’t using electronic health records — a number that goes up to 95 percent if you look only at offices with five or fewer doctors. One major reason: Doctors generally don’t have a financial incentive to invest in the necessary technology.

As the NYT reported:

The experience of Dr. Richard Baron, who practices with three other physicians in an office in Philadelphia, provides a glimpse into the predicament. In 2004, Dr. Baron and his colleagues made the transition from ink and paper to computers and electronic health records. They were doing what health care reformers had been advocating for years. But the arithmetic of investing in health-information technology is daunting, especially for small practices like Dr. Baron’s. His office spent $140,000 on personal computers, including tablet PCs, servers, software and installation.

The office’s annual technology costs, he said, were about $50,000, including maintenance and technical support, and he plans to upgrade the three-year-old computers at a cost of $54,000. Those costs do not include the lost productivity in the first year, when the staff was learning to use the new technology.

Dr. Baron’s office has saved money — in transcribing medical reports, for example — and his practice now handles its 6,000 patients with three fewer office employees. He described other benefits, mainly the ability to find information quickly for patients, hospitals, insurers and labs with a few keystrokes.

The technology, Dr. Baron said, has also helped make him become a more adept physician. But it has not yet paid off in dollars and cents: the savings in salaries is less than the costs entailed in computerization. “It is a high-risk venture,” he said, “and you do it at your own financial peril.”

Until those incentives change — and don’t hold your breath on that one — it’s hard to see how online services focused on electronic health records are going to have much impact.

Of course, there’s also the question of how sites like HealthCare.com plan to make money. Monster says the site aims to be the “Google of healthcare” — now, where have we heard that before? — and emphasizes that the company’s founders, Matias de Tezanos and Jose Vargas, are executives with “deep experience in digital media.” (See their bios here; interestingly enough, neither seems to have any background in healthcare.) Monster, who peppers his spiel about the company with Web 2.0 buzzwords, says the site will “add value to the integrated agenda for enabling patient-centered healthcare,” whatever that means, and adds that HealthCare.com will take a “global approach” as opposed to the supposedly U.S.-centric efforts of its competitors. Stay tuned for how all that plays out.

HealthCare.com, which has offices in Miami and Bellevue, Wash., raised $1.2 million from Robert Monster’s new venture firm, Monster Venture Partners. The company’s founders and two “high net-worth individuals” from Latin America joined in the funding, Monster says, with founder contributions accounting for more than half of the $6.1 million. The Seattle Post-Intelligencer’s venture blog has some additional details here.

Unfortunately, his recommendations are disappointingly small-scale and reflective of the inordinate faith that many high-tech aficionados place in technological “fixes” for complex social phenomena. I’ll explain why in a moment.

To Grove’s tremendous credit, he argues in a recent interview with Wired News that the most pressing issue facing the U.S. healthcare system is the growing number of uninsured Americans — 44.8 million, or nearly one-sixth of the population, according to the latest Census Bureau data — and the subsequent stress that treatment of the uninsured puts on the nation’s emergency rooms.

As he says:

As the population ages, people are being thrown out of the insurance boat at a faster and faster rate and it’s the forgotten part of medicine.

We have the Human Genome Project, personalized medicine, war on cancer, CyberKnife, stem cell research on one hand — no doctor to be found or to take care of your sore throat on the other. That’s a pretty ugly picture. It’s pretty ugly today but it’s going to be uglier five years from now.

Now Grove is one of the smartest people around, and it’s refreshing to see him diagnose the failure of U.S. healthcare so succinctly. It’s equally hard to argue with his preference for breaking this hairball of a problem into manageable chunks while favoring “doability as opposed to desirability.” And, of course, the Wired News interview may not have fully captured the depth of his thinking on the subject.

That said, Grove’s proposed solutions strike me as so much whistling past the graveyard. At best, his ideas might improve access to healthcare on the margins, but without really addressing the plight of the uninsured, the breakdown of employer-provided insurance or soaring healthcare costs. At worst, they might even aggravate some of the trends he deplores.

Starting from the top, Grove dismisses the notion of universal health care on the grounds that it would disenfranchise insurance companies and that no one knows exactly how to bring healthcare cost inflation under control. No one doubts that insurance companies would fight any plan that threatened their role in the system, although Grove doesn’t acknowledge that some universal-coverage plans envision a prominent — in some cases, even central — role for insurers. (Whether that’s a good idea or not is a subject for another day.)

As for his second point, there’s no shortage of ideas — good, bad or indifferent — for cost control, such as allowing Medicare to bargain down drug prices or limiting the use of costly, intrusive and frequently wasteful medical procedures on elderly patients near the end of their lives. What’s more, most other industrial nations have already implemented some form of cost control, which helps account for the fact that their per capita healthcare spending is so much lower than in the U.S.

Instead, Grove favors tinkering around the edges of the system. He suggests that “retail clinics” — essentially nurse-practitioner-staffed outlets in Wal-Marts or drugstore chains designed to handle everyday ailments quickly and without fuss — might be a “disruptive technology” that could solve the emergency-room crowding problem. For instance, Grove says:

There is an incredible need of medical help for the 70 (percent) or 80 percent of medical care that is routine … where the diagnosis is straightforward and treatment is basically codified. They are conveniently located to where people live or shop or show up for emergency care. And by concentrating on effective delivery of standard care, they can do it conveniently but also much less expensively than doing the standard production. That’s the complex manufacturing logic…. You wouldn’t think about building a toy on the same production line as putting up airplanes. The factories will be different and the cost structure will be different.

Well, retail clinics are certainly on their way, so we’ll presumably know soon enough if they can lower healthcare costs by treating large numbers of people cheaply and effectively. On the other hand, the major problems facing the uninsured have less to do with the inability to see a doctor when they have the sniffles than with the crippling hospital bills they can face after a severe accident or the onset of an unexpected health problem like heart trouble or diabetes.

What’s more, some experts already worry that the spread of these clinics might further erode the financial health of community hospitals by drawing off healthier — meaning “cheaper to treat” — patients. Hospitals tend to subsidize care for the uninsured by charging higher prices to insured patients. If healthier insured folks take off for retail clinics, that means less money to cover expensive conditions of the uninsured that no clinic can touch.

Furthermore, the bulk of U.S. healthcare spending covers the treatment of a minority of chronically ill and typically elderly patients who won’t be candidates for these clinics in the first place. Here, Grove has another solution: Advanced sensor and communications technology with which to wire up the homes of the elderly. This would allow them to stay home, with medical personnel monitoring them remotely and reminding them to take their meds, instead of moving to long-term care facilities. So far as it goes, that vision is laudable and humane — assuming, of course, that you’re willing to overlook exactly how long the tech industry has been promising us the sort of “ubiquitous computing” that would be necessary to make it work. According to Wired News, Grove estimates that shifting one-fourth of the nursing-home population back home could save $12 billion a year.

Let’s extend the benefit of the doubt and assume that those savings are net of the expense of building out this information infrastructure in the first place. They’re still a drop in the bucket compared to the $207 billion spent on U.S. long-term care in 2005, according to Georgetown University’s Long-Term Care Financing Project. (Of that, $130 billion went for nursing-home care, the rest for home care.) Unless there’s something very screwy in the numbers here, the overall cost impact of wiring up seniors’ homes seems likely to be negligible.

Grove’s final idea is another technological fix — standardized, Web-based electronic health records that any doctor could access once a patient “unlocks” them. Once again, assuming it satisfies relatively straightforward privacy and reliability concerns, there’s nothing at all wrong with this idea. Theoretically, at least, electronic health records could promote cooperation between medical specialists, reduce medical errors and improve the long-term health of patients via better preventive care.

At the moment, however, few players in the healthcare system have a financial incentive to implement such a system, which is one of the main reasons it doesn’t yet exist. Any insurer that invests in an electronic-record system — which, even with off-the-shelf technologies, will generally cost more and work less well than expected — is likely to bear the costs without reaping many of the benefits. That’s because many of its presumably healthier customers are likely to change jobs at some point and move on to competitor health plans, who will then garner any savings. Nor do the competitive insurance and hospital industries have much reason to adopt the universally compatible, Internet-based systems Grove favors, since that would just make it easier for their customers or patients to take their records — and their business — elsewhere. Grove doesn’t even seem to acknowledge these fundamental adoption issues, much less address them.

Since last November, Grove has apparently offered similar thoughts to a variety of audiences, including a Stanford lecture crowd and my former WSJ colleague Lee Gomes. Which is too bad, in a way, because it suggests to me that no one has seriously challenged his rather glib prescriptions in that time. The healthcare crisis is real and urgent, and we could all benefit from the best thinking of a sharp-witted “rational capitalist” of Grove’s stature. Unfortunately, I don’t think he’s really offered it to us yet.