Practice Fusion

Practice Fusion was a cloud-based electronic health records (EHR) startup that offered its software free to small medical practices — a radical approach in a market where EHR systems typically cost thousands per year. Founded by Ryan Howard, the company's model was to monetize through pharmaceutical advertising and data analytics, essentially becoming the 'Google of healthcare' — offering a free product supported by ads. The approach attracted $150 million from Kleiner Perkins, Peter Thiel, and other top investors, and Practice Fusion grew to be used by over 30,000 medical practices serving approximately 100 million patient records. But the 'free EHR with pharma ads' model created a fundamental conflict of interest. In 2020, the Department of Justice revealed that Practice Fusion had accepted kickbacks from an opioid manufacturer (Purdue Pharma's partner) to implement clinical decision support alerts within its EHR system that were designed to increase prescriptions of opioid painkillers. Essentially, when a doctor was treating a patient with chronic pain, Practice Fusion's software would pop up a recommendation suggesting extended-release opioid medications — a recommendation paid for by the opioid manufacturer, not driven by medical evidence. This occurred during the peak of the opioid epidemic. Practice Fusion pleaded guilty to criminal charges and paid $145 million in penalties. CEO Ryan Howard was personally charged with receiving kickbacks and sentenced to prison. The company had been sold to Allscripts in 2018 for just $100 million — far below its peak $700 million valuation — and Allscripts subsequently wrote down the acquisition. The case demonstrated that monetizing healthcare software through pharmaceutical advertising creates dangerous incentive misalignment that can contribute to patient harm.