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Docs have always been a tough sell for Outcome. This snafu isn't helping.

Even if Outcome Health could take a magic purple pill and make its current legal and PR troubles go away, the job of peddling TV screens and tablets to doctors is going to be an uphill climb.

Physicians have become increasingly wary of the bad optics of appearing to be too chummy with Big Pharma. And federal law now requires them to report everything—from meals to coffee mugs—that they receive from pharmaceutical reps visiting their offices to tout the latest drugs. Twenty percent of the content offered on Outcome Health's in-office TV screens consists of pharmaceutical ads shown between educational programs on health, wellness, healing and various medical treatments. Though physicians and hospitals don't pay for Outcome Health's service—drugmakers do—the association is too close for comfort to some docs.

"They have great educational material, but it comes at a cost," says Maria McGowan, vice president of marketing at Downers Grove, Ill.-based DuPage Medical Group, the largest independent doctor's practice in metro Chicago. "The cost is advertising that is subsidized by pharmaceutical and other organizations."

In 2012, DuPage Medical decided to handle the task of producing educational videos for patients in-house.

Outcome's target—jumping from reaching 20% of physicians' offices nationwide now to 70% by 2020—could become even tougher to hit now that investors have sued alleging fraud.

The ripple effect has begun. Advocate Health Care, the largest hospital network in Illinois, uses about 500 of Outcome's devices at its outpatient sites and has paused plans to add more, spokeswoman Lisa Lesniak says in a statement.

She adds that Advocate uses a majority of its own content on the devices and rigorously vets all content, including advertisements.

It's not clear the size and type of doctors' practices that Outcome pitches its service to, though the privately held company's devices are in more than 40,000 offices. Besides Advocate, another notable local user includes Edward-Elmhurst Health, a three-hospital system in west suburban Naperville, Ill. The network has been using Outcome devices for about five months, but has put expansion plans on hold, Edward-Elmhurst spokesman Keith Hartenberger says in a statement.

But other large hospital systems and doctors groups in the Chicago area don't have their offices equipped with Outcome's screens and devices, including Rush University Medical Center on the Near West Side, UChicago Medicine on the South Side and NorthShore University HealthSystem in Evanston.

Dr. Joel Shalowitz, an internist and professor at Northwestern University's Kellogg School of Management, says Outcome is paddling against some strong undercurrents. Besides doctors wanting to avoid any appearance of prescribing drugs whose ads pop up on screens throughout their offices, physicians in general are prescribing less medicine. If they do prescribe, patients (and their insurance companies) want cheaper generics. And consider the number of apps that doctors are using for patients, too, to help diabetics keep track of their blood sugar levels, for example.

"In an era where we're trying to customize patient care, does a generalized approach in the waiting room make sense?" Shalowitz asks.

Still, Outcome has its champions. Take Dr. Manoj Mehta, a gastroenterologist in Wilmette, Ill. He says he doesn't think doctors will suddenly drop services that help them better explain complicated diseases and procedures to their patients. He uses Outcome's wallboards, which resemble giant tablets that can display 3D rotating images. For a patient experiencing stomach pain, for instance, Mehta can bring up a diagram of a belly, then scroll through muscles and organs to show the patient what might be happening.

"The wallboard was the icing on the cake," he says. "It would be something I already did on paper. Patients love it. They find it very useful."

In his waiting room, a TV displays videos for patients interspersed with pharma ads. Mehta says patients don't complain that they're being influenced to buy a certain drug, or that he might be.

As for Outcome's tussle with investors and Big Pharma?

"I don't see it impacting me or what I do," Mehta says. "I certainly wouldn't consider returning (my devices) over it."

In a statement, Outcome spokesman John Eddy says the company works with about 230,000 providers, and 95% of medical offices renew the devices.

"We remain committed to always delivering the best-in-class health information to all of our medical offices and health systems," Eddy says.

He adds that Outcome is growing. In the last three weeks, the company has added several hundred more medical offices.

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