Is there a place for pharma in the emerging EHR market?

Have you ever watched a teenager use a smartphone? Neck craned downward and headphones on, they're totally absorbed and engaged. Now replace the teen with a physician using EHR software on tablets or mobile devices.

OK, so doctors aren't as absorbed as tech-crazy teens, but electronic health records can be just as essential to their daily existence. More than three-fourths of practices have implemented a basic EHR system, according to HHS numbers, and around half now use advanced versions. EHR software vendors have direct access to--and the undivided attention of--those healthcare providers in a whole new way.

It's no surprise, then, that as traditional sales-rep access to doctors diminishes, pharma companies are zeroing in on EHRs, looking for ways to use that new "last mile." The current leaders are Epic Systems, eClinicalWorks, Allscripts ($MDRX) and Practice Fusion and NextGen, in that order, among physicians, according to SK&A research.

EHR promos won't be akin to the DTC marketing on TV, print or even the internet, though there's plenty of curiosity--and some experimenting--with direct messaging to physicians through EHRs. Doctors do want reliable information from pharma, but it's unlikely that EHR systems will ever track logged-in doctors and push them ads, just like general consumers on the internet. One reason: Some EHR software won't accommodate it. Another is that some healthcare groups and pundits have already raised flags about the idea.

Practice Fusion CEO Ryan Howard

The EHR software makers that work with pharma companies are treading lightly. Practice Fusion early on got a rep for EHR advertising to doctors, even touting itself as a free ad-supported system. Today its software is still free for doctors, but the majority of its revenue comes from transaction fees from connected labs, pharmacies and imaging centers, CEO and founder Ryan Howard told FiercePharmaMarketing.

Practice Fusion does still serve relevant ads to physicians from companies about new therapies, products and services. For instance, it has sold two sponsored EHR advisories over the past year, one for vaccinations by Merck ($MRK) and the other for asthma and COPD by AstraZeneca ($AZN). A third revenue stream is Practice Fusion's Insight, a free data tool that can "visualize health trends from aggregated de-identified data" with a premium paid version that can be used for more in-depth data and analysis.

Howard brushes off direct marketing as "not what we're about." He said the work they do with pharmaceutical companies gives them "access to solutions, not to EMR or data directly."

Howard is more concerned about evolving the EHR market to cloud-based solutions, which Practice Fusion and one other top 10 provider Athenahealth ($ATHN) already are. With interoperability--a much-debated and discussed EHR problem--healthcare companies could enable critical mass quickly to answer real-world questions about the effectiveness and safety of new drugs, for instance, or patient adherence.

Athenahealth COO Ed Park

Athenahealth COO Ed Park echoed the benefits of a cloud-connected software system. Updates, information and best practices can easily be implemented across the network. Athenahealth can, for example, A/B test messages for effectiveness in real time, tweak them and then share positive results with the entire ecosystem. Its revenue is generated as a percentage of money healthcare providers collect on its system, typically 5% to 8%. It does not offer ads on the Athenahealth EHR system, but did inherit an ad-supported mobile service, along with its legacy relationships with pharma companies and others, when it acquired the popular physician drug information app Epocrates in 2013.

So where does that leave pharma in the still evolving EHR scene?

"Historically, pharma has been a lot about how to sell molecules and brand them, and then education, teaching how to use them," Park told FiercePharmaMarketing. "There is a renewed interested in selling solutions or value. The question is how do they become relevant in a world where 80% of physicians are on EHR?"

He added, "We think pharma companies will always be part of the solution. It accounts for 12% of overall spending in healthcare today. And when used correctly and used well … results in better outcomes. It's about finding those points of cooperation."

- read the HHS data
- get more on EHRs from SK&A

Special Report: Top 10 drug brands by payments to doctors | Top 15 pharma companies by 2014 revenue - Merck - AstraZeneca