Going Open Source with Medsphere

In a previous post, I wrote about how those closed monolithic electronic health records (EHRs) sold by major commercial vendors, such as Cerner, Epic, and NextGen aren’t necessarily the best thing for customers. In what seemed like a bold move, Allscripts was taking steps–no, not to rip open its source code, but to allow outside developers to write programs for its EHR.

As hospitals and doctors scramble to install EHRs to meet government-imposed rules and deadlines, a major concern for many hospitals is cost. Midland Memorial, a 320-bed hospital in Midland, Texas, struggles financially because it treats a high percentage of uninsured patients. It would have been hard for it to pony up more than $20 million to implement an EHR system, and qualify for government incentives. Then, the folks in its IT department came across Medsphere.

The Carlsbad, Calif.-based company is building its business around one of the most successful EHRs around. It originates from the most unlikely place: the Department of Veterans Affairs. Called VistA, this open source software has been successfully used by the VA hospitals for 15 years, and has cost more than $8 billion in taxpayers’ money to develop. Anyone can download it for free.

Medsphere has added additional functions to VistA, by developing, for instance, ob-gyn and pediatric programs, as well as interface engines. It will customize it, and help a hospital staff deploy it. It also provides training and maintenance. Russell Meyers, the CEO of Mildland estimates that it cost the hospital $10 million, half of what some of the bigger vendors were quoting him. Because Midland is on target for meaningful use requirements, it expects to get a $5 million payment from the government. “Medsphere is in the middle of that, helping,” says Meyers.

Same story at Lutheran HealthCare, a 476-bed hospital in Brooklyn, N.Y., with a high percentage of Medicare and Medicaid patients. “We had to [find] innovative ways not to go down with the ship,” says Claudia Caine, chief operating officer. Chief Information Officer Steve Art had looked into Epic, Eclipsys (now part of Allscripts), and McKesson, but could not afford the $30 million tag. After much research, he settled on VistA, and partnered with Medsphere. (He tried to download the EHR, but it was too big, so he sent a check for $47 to purchase the CDs).  Two weeks after implementation in November, the Computerized Physician Order Entry (CPOE) system was up and running. By July 2011, the hospital will be paperless. The bill should come out to a total of around $10 million.

Hospitals get to keep the source code. “There’s more benefit to open source, because you can tailor to your individual needs,” says Art. “With big vendors, you hope that others want the same enhancement, and you pray that you’re on their list.”

Then why haven’t more hospitals gone open source? Mike Doyle, the CEO of Medsphere says it’s a lack of awareness. But it could also be that hospitals shy away from a product that is not commercially proven, which is what Meyers thinks.

Founded in 2002, Medsphere has raised $50 million from VCs, including Thomas Weisel Venture Partners, Epic Ventures, and Azure Capital Partners.

Click on Going Open Source to read Moukheiber's original blog post.