Allscripts snaps up rival Practice Fusion, the largest free EHR vendor, in $100M deal

Allscripts will pay $100 million for competitor Practice Fusion in a bid to bolster its reach into physicians' offices.

Allscripts is buying competing electronic health record vendor Practice Fusion in a $100 million deal that bolsters Allscripts' reach and scale—and moves it up the ranks of the largest EHR businesses in the market.

Allscripts has been the third-largest EHR vendor by market share with a 7.46% slice, followed by Practice Fusion at No. 4  with 6.34%, according to SK&A research. The largest EHR is Epic Systems with a 13.5% share and eClinicalWorks’ 10.4% share stands at No. 2. With the deal, Allscripts could eke out a lead over Epic, if it can keep its customers and PracticeFusion's, too.

The buyout comes after Practice Fusion spent 12 years working to gain traction in the competitive software space, pushing a free-to-users, cloud-based solution with a revenue model built on ad sales and transaction fees. That model was unique in the EHR business: It offered the free basic software to practices with the caveat that users would see relevant promotional messages inside the electronic patient charts. Practice Fusion, for example, placed sponsored EHR advisories for vaccinations by Merck and for asthma and COPD by AstraZeneca.

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Practice Fusion has done well among smaller, independent physicians, building to 30,000 practices and 5 million patient visits per month. It also ranked fourth on Capterra’s 2017 list of most popular EHR software—measured as a combination of total number of customers, users and social presence—while Allscripts was No. 2 with 40,000 practices and 350,000 users.

Allscripts said in a news release that the “strategic acquisition” would advance its health information technology solution strategy, adding that “Practice Fusion's EHR will complement and round out Allscripts' existing ambulatory clinical portfolio, providing a value offering and ‘last mile’ reach to the underserved clinicians in small and individual practices.”

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Allscripts president Rick Poulton called Practice Fusion’s technology “affordable” in the release, and when asked by FiercePharma to clarify Practice Fusion’s previously free status, an Allscripts spokeswoman said via email only that “Allscripts has nothing to add to what we announced in yesterday’s new release.”

Practice Fusion was once a Silicon Valley darling—with high-profile investors including Paypal founder Peter Thiel and Kleiner Perkins—and had attracted more than $150 million in venture capital. It had even begun to plan for an IPO. However, it struggled more recently. Founder and CEO Ryan Howard stepped down in 2015, the company cut 25% of its staff in 2016, and rumors surfaced of a possible buyout by another competitor, athenahealth, according to Techcrunch.