Medem Quietly Folds Its PHR Business – Acquired by Medfusion

Medem, one of the very early entrants into the Internet-based PHR (iPHR) market is calling it quits for its PHR efforts, selling its iHealth platform to Medfusion.  Really not all that surprising as Medem, which was originally spun-out of the AMA, has dedicated very little R&D dollars towards the iHealth product, a product that is now woefully behind in features, functions and overall GUI as compared to more contemporary iPHR offerings.  In our Medem profile for last year’s iPHR Market Trends Report, Medem received one of the lower product ratings of the 20 companies profiled.

Medfusion, a provider of patient-provider communication tools and consumer portals currently serves some 20,000 physicians.  A cursory review of the Medfusion product portfolio finds a significant amount of overlap with Medem’s iHealth. Clearly, Medfusion is looking to acquire customers and migrate those customers to Medfusion’s suite.  With this acquisition Medfusion has the potential to boost its customer base some 40% to 28,000 physicians, provided there are no defections to competing products such as those from MEDSEEK and RelayHealth.

Not a bad move by Medfusion as a key component of the recently adopted meaningful use criteria is patient engagement, e.g., having a PHR populated with real-time data by 2013.  The challenge for Medfusion (and every challenge is an opportunity) is to position themselves effectively against EMR vendors who may come to market with their own complete solution offering. It is also important to note that Medem had partnerships with both Google Health and HealthVault.  It will be interesting to see if Medfusion maintains and maybe even strengthens those partnerships.

One strategic scenario Medfusion may pursue is to aggressively move forward and strike partnerships with select ambulatory EMR vendors and jointly go to market with a complete solution that will allow a physician practice to meet meaningful use criteria.  In Chilmark’s quick review of the Medfusion website, no EMR partners were listed.  Not a good sign for this scenario.  That being said, Medem did have a close partnership with AllScripts-Misys so it may be interesting to see if Medfusion is able to capitalize on that partnership. (Addendum: AllScripts-Misys announced today a partnership with Medfusion, thereby extending the Medem iHealth reltionship.)

Maybe another, more likely scenario, is for Medfusion is to buy up a couple more of the smaller patient-provider/provider-centric PHR players in the market, garnering a critical mass of customers and have themselves be acquired by a larger EMR vendor looking to fill the meaningful use gaps in their portfolio.  Chilmark’s hunch is that this latter scenario is a more likely.

And what about Medem…

Hard to say what direction they are now headed in.  Going to the Medem website, one is directed to Medfusion giving the appearance that Medem and its staff have evaporated.  However, head over to the Health Care Notification Network (HCNN), which Medem developed, and one does find a reference to Medem but that is about it.  Medem, it appears, is no more.  (Addendum: Received an mail from Ed Fotsch, President of Medem after this post went up stating that Medem is very much alive, just refocusing its energies on the physician notification market with its HCNN initiative.)