Apple Inc.'s 2007 unveiling of the iPhone changed the way people use their cell phones. For internist Thomas Giannulli, it signaled the chance to rid doctors of reams of paperwork and end his decade of hard luck in business.

A self-described "obsessive" computer programmer, Giannulli had spent years writing programs that physicians could use on hand-held devices. He envisioned the day when doctors would no longer tote around fraying patient files.

But there was a problem: The devices never stuck around. Giannulli, 43, saw successive programs he wrote for Windows CE and Apple's Newton PDAs fade from use as the devices fell out of fashion.

The iPhone, though, looked like it had staying power. As soon as Giannulli saw the first screenshots of the smart phone, he called up a group of programmers with whom he often kicked around ideas.

"The second it was announced, we started to figure out how to build a product for that," he said. "This thing was going to be hot."

Giannulli's goal came to fruition in mid-July when his tiny Westlake Village company, Caretools Inc., launched iChart, the first clinical record application for the iPhone. Available for download from Apple's online App Store, iChart allows a doctor to write and track prescriptions, handle billing and take notes with a few taps of the thumb.

About 100 doctors from as far away as Australia and Italy have downloaded iChart. Revenue has been modest, Giannulli admits, especially after Apple takes its 30 percent cut from the $140 he charges per download. (Users also have to pay a $99 annual fee for ongoing maintenance, and in the future will be charged for downloadable upgrades.)

If iChart takes off, Giannulli hopes to put his job as a doctor on hold and run the company full time. Currently, he still practices at his clinic twice a week in addition to writing computer programs in his spare time and overseeing four part-time employees.

But with iChart, Giannulli hopes he is on the cusp of a huge untapped market. To him, it makes perfect sense that physicians looking for a portable, Internet-ready, easy-to-use device would gravitate to Apple's latest product.

Others aren't as sure. David A. Collins, director for health care information systems at the non-profit Healthcare Information and Management Systems Society, said he has yet to hear significant buzz among doctors around the iPhone, which is significantly smaller than some other hand-held electronic medical record devices on the market.

But Collins said interest is emerging and Giannulli's success will likely depend on positive word of mouth from tech-savvy doctors who swap news over the Internet on the latest electronic medical records programs.

"There's probably a niche," he said.

New trends

Giannulli hopes Caretools will capitalize on a couple of trends: A federal push for doctors to swap traditional paper records for electronic ones, and more physicians using mobile devices.

The federal government favors electronic medical records because of their potential to cut health care costs, prevent medical errors and reduce Medicare fraud. In 2004, President Bush called for most Americans to have access to electronic records in 10 years.

Companies also have pitched into the conversion effort. Two years ago, several large employers, including Wal-Mart Stores Inc., announced with fanfare that they would provide digital health records to employees. Recently, Internet giants like Google Inc. and Microsoft Corp. have launched sites for managing personal health records online.

But the move to digitize health records has not gone smoothly, as privacy issues, a lack of funding and rapidly changing technologies have hampered adoption. A 2007 survey by the Office of the National Coordinator for Health Information Technology found only 14 percent of doctors nationwide have minimally functioning digital record systems.

Still, doctors since 2001 have increasingly used mobile devices to track and treat patients, according to a 2008 study by Manhattan Research.

But Caretools faces stiff competition. Locally, Irwindale-based MedicWare Inc. has been producing programs for Windows computers and mobile devices since the 1990s. MedicWare was acquired in early August by Clinix Medical Information Services LLC, a Brentwood, Tenn., company.

Meanwhile, San Mateo-based Epocrates Inc. develops medical applications for PDAs and Blackberries that are used by more than 200,000 physicians nationwide. This month, it launched an application for the iPhone that acts as a reference guide for drugs and insurance information.

"(The iPhone) is going to expand the market," said Michelle Snyder, the Epocrates' vice president of marketing. "Physicians are going to buy these devices anyway as their phone and to have access to e-mail. It makes sense that they would download clinical applications they can use at work."

Reversing his luck?

Giannulli cheerfully admits that writing medical programs is his obsession. In fact, he trained as an engineer and went to medical school so he could learn what kinds of computer programs doctors needed the most. As a resident at the University of Texas in Houston, Giannulli used to sit up at 3 a.m. while on call working on a medical records program for the Newton. "People thought I was insane," he laughed.

But a string of bad luck followed Giannulli's early efforts. Caretools was originally Physix, a company Giannulli created in 1996 to market his product for the Newton. Physix was acquired in 1999 by Data Critical Corp., a Seattle-based firm, but it crashed six months later in the dot-com collapse and was bought out by General Electric Co. Three years later, Giannulli bought Physix back and renamed it Caretools.

Then the first product Caretools created didn't even see the light of day. The company was contracted by Delphi Corp. to design a suite of software for home care medical devices. But Delphi filed for bankruptcy in 2005 before marketing its devices.

Giannulli managed to buoy Caretools in the interim by introducing PocketChart, a Windows CE-based application for PDAs, in 2003. PocketChart had similar functions to iChart and at its peak had about 10,000 users, generating $3 million in total revenue. But use dwindled when doctors turned to devices like the Blackberry and PDAs with other operating systems.

Now, his challenge with his iPhone will be to improve his first-generation product and move it beyond early adopters. Giannulli said he's already planned an upgrade that will allow doctors to electronically file prescriptions with a nearby pharmacy or get a patient's lab results directly on their iPhones.

Among those early users is Dave Neighbors, a doctor of pediatrics and sports medicine at St. Joseph's Hospital in Breese, Ill. A self-described "Mac guy," Neighbors stumbled across iChart while browsing through the App Store. It struck him as a convenient way to use his new iPhone at work.

And for the most part, it has been. Neighbors likes that he has all his patients' records with him at his clinic and at the hospital, and he finds it faster to take notes on iChart during patient visits. But some bugs have cropped up and he's quickly spotted areas where it could improve.

"It's a work in progress," he said. "But it shows a lot of promise."

Caretools Inc.

Headquarters: Westlake Village
Chief Executive: Thomas Giannulli
Founded: 2002
Core Business: Electronic medical records applications on hand-held devices
Employees in 2008: 4 part time
(up from 1 in 2007)
Goal: To see his latest iChart application for the Apple's iPhone widely adopted by doctors
Driving Force: Federal mandate to digitize the nation's health care records system, and the increasing popularity of smart phones and other hand-held electronic devices

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