Obama's Push to Digitize Health Care Boosts Startups

By Ari Levy

President Barack Obama's effort to bring the health-care system into the digital age is boosting a couple of software startups -- ZocDoc and Practice Fusion -- that are trying to do just that.

ZocDoc, which lets patients book medical appointments via the web, said today that former Senate Majority Leaders Tom Daschle and Bill Frist have joined the advisory board to help the New York City-based company expand.

Practice Fusion, meanwhile, announced today it raised $2 million in debt from a group of angel investors, following a $23 million round of financing last year. Physicians use Practice Fusion's software to track their patients' medical history, schedule appointments, prescribe medication and provide referral letters.

While companies big and small have spent years trying to crack the electronic medical records market, it was President Obama's 2009 economic stimulus plan that sped up the process. As part of the plan, the government will invest up to $27.4 billion by 2021 to get health organizations on board.

ZocDoc is taking a bipartisan approach. Frist, a former heart and lung transplant surgeon, is a Republican and served as his party's leader in the Senate. Daschle led the Democrats in the Senate and now works at law firm DLA Piper, where he provides advice to clients on health care.

"They know a lot about the existing health-care establishment," said ZocDoc Chief Executive Officer Cyrus Massoumi. "Having people who have spent time at the highest level fixing the U.S. health-care system will help us leverage what we've done."

ZocDoc, founded in 2007, is used by about 800,000 people. The site lets users search for physicians in a particular practice and city and book the appointment online, rather than having to call around. Doctors pay $250 per month for the system, which is free for patients.

Practice Fusion, which opened its doors two years earlier, says its service for storing data is used by more than 130,000 medical professionals serving 29 million patients. The system is free for all users, and the San Francisco-based company currently generates all of its revenue from advertising on the site.

Venture capitalists and other investors have poured a combined $133 million into the companies, and there's plenty of overlap. Peter Thiel's Founders Fund and Ron Conway's SV Angel are investors in both. Salesforce.com CEO Marc Benioff backed ZocDoc, while his company is an investor in Practice Fusion.