The Medsphere Systems Corp., which sells electronic health record systems based on the open-source technology first built by the Department of Veterans Affairs, has secured $12 million in financing to expand its development efforts.

Hospitals are adopting Medsphere's OpenVista electronic health record solution to improve clinical care and qualify for federal stimulus funding via an accelerated implementation and adoption process, MedSphere executives said Monday when they announced the new financing.

"The nationwide push for healthcare reform and the focus on electronic health records as a key component in reform are having a measurable impact on health IT demand," said Irv Lichtenwald, the company's chief financial officer.

The investment came from Azure Capital Partners, Epic Ventures, Thomas Weisel Venture Partners, Western Technology Investment, physicians and other private investors, Lichtenwald said.

Hospitals must demonstrate by 2011 that they have implemented EHR solutions that improve clinical care to be eligible for financial incentives as part of the $19 billion investment in healthcare technology included in the federal American Recovery and Reinvestment Act (ARRA).

Lichtenwald said Medsphere is committed to implementing OpenVista in a fraction of the time required by proprietary EHR vendors.

OpenVista is the commercialized version of the VistA EHR created and developed by the Department of Veterans Affairs more than 20 years ago. VistA is often cited as a critical component in the VA hospital system's recognition as a national leader in quality patient care.

Because it is an open-source solution, OpenVista can be implemented at commercial healthcare facilities much more quickly and cost-effectively than comparable proprietary solutions, MedSphere executives claim.

They said Midland Memorial Hospital in Midland, Texas, used OpenVista to achieve established levels of automated patient care and clinical process improvement in less than half the time and at roughly one-third the cost of hospitals using proprietary technology. Midland has also realized a host of improved clinical results, including fewer patient deaths and medical errors, and decreased infection rates.