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Athenahealth: Service First

May 29, 2009
by Mark Hagland
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With a strong focus on service, athenahealth is giving pure technology companies a run for their money

Jocelyn Piccone, COO of Wright State Physicians in the Dayton, Ohio area, doesn't care about theory. For instance, she's not particularly fascinated by the business model of her practice management tools, as such. But she does care a lot about what her tools can do. And Piccone (who also serves as de facto CIO of the 160-physician, 23-site multispecialty physician group, though she doesn't carry the title), has been very happy with the results of the billing and EMR solution provided by Watertown, Mass.-based athenahealth.

Choosing that solution spoke to the particular needs of her organization, Piccone reports. To begin with, when she joined Wright State Physicians, “They were using an old DOS-based software program to do billing,” she recalls. “I had come from using a very advanced system for workers' compensation in an occupational health setting, and when I came here, I said, ‘I can't believe that this is what they're using for software.’” Very soon afterwards, however, Piccone and her colleagues began the process of vendor selection for a new practice management and billing solution, and ended up choosing athenahealth's athenacollector solution. Among the key factors to Piccone, she ways, was the ability to centralize billing as she felt it was inefficient with regard to collections and days in accounts receivable.

Erica drazen

Erica Drazen


And now, several years later, physicians are being pressured to submit at least the vast majority of their claims electronically, making it possible to see every element of information for every claim in one electronic place. “And with athena, the way they're set up, all the information on the action of the claim is right there,” Piccone says. “The whole idea is to keep your cash flow hopping as fast as possible all the time.”

Piccone is far from alone in her satisfaction. According to athenahealth executives, 19,741 medical providers were currently live on the company's national network, athenanet, as of April 2009, with 1,338 medical group clients in over 40 states using its revenue cycle management and EMR services.

And what has put athenahealth in a unique position in the physician group software-based services niche is the Web-driven technological backbone that the company's executives and programmers have put in place in the last several years, a feature that some experts say is unique in the industry.

The company “is clearly interesting, because of the totally different business model they've adopted,” says Erica Drazen, Sc.D., partner in the Waltham, Mass.-based Emerging Practices Division of the Falls Church, Va.-based CSC Corporation. “They essentially went in and outsourced the billing function of medical groups. And now they have an advantage in that they have all these payer linkages automated, and it's a pretty sweet model they're using.”

Adds Drazen's colleague in Emerging Practices, Principal Researcher Jane Metzger, “Even the outsourcing model they've created is interesting: they negotiate with each customer on it. So it's very integrated into the operational work in the practice. And if you think about the traditional outsourcing of billing, you send your encounter sheet over to the billing company, so they could do a lot more with it. Of course, the amount of work that was put into building that technological infrastructure was unbelievable.”

Most of all, Metzger says, a big piece of the company's success can be traced back to the vision and hard work of its leadership, especially the organization's founder and CEO, Jonathan Bush, Jr. “Years ago, when I had a few minutes with Jonathan Bush,” Metzger says, “he pointed out that they had spent years building payer rules in the background. And that's the hellacious part of billing. So they realized that they could help folks with that aspect, which is so difficult for physicians and medical groups.”

A man with a plan


Jonathan bush

Jonathan Bush


The self-confident Bush says he's flattered HCI readers asked to learn more about athenahealth (see HIT-MIV intro, page 12), but also that he's not surprised. Bush chalks it up to the company's unusual business model and its continuous growth based on client sign-up rather than acquisition. And, he says firmly, “The vision of pieces of static software is a fundamentally bankrupt vision.” Instead, athenahealth is about the service, not the software, he says categorically, even while conceding the amount of effort and planning that went into its technology.

“We're very rigorous about this: our employees are charged with a mission,” Bush says. “The mission is to be medical groups' most trusted business service. And in fact, everybody's photo ID says in the back, ‘In order to be medical groups’ most trusted business service, I will provide,' and it includes a variety of items.” Bush says he looks forward to the day when athenahealth is able to give its software away, and charge entirely for service. The key here is the “integrity infrastructure, the ability to move information across places,” and that's based on more than just software.

Put a bit more concretely, “On a practical level, the business model is a supercharged subscription business,” explains athenahealth Chief Marketing Officer Rob Cosinuke. “Think about a newspaper, a magazine, or OnStar, which I used to work on,” Cosinuke says. “Those kinds of entities experience on the order of a 20 to 30 percent attrition level every year. We have delighted ‘athenistas’ year after year,” he emphasizes. “We say, we've got skin in the game with you. And our customers see themselves getting paid better and faster,” which he says is the key factor in the company's ongoing growth. In fact, he adds, “Because we're not charging them a big licensing fee up front for the software, it's dependent on our having customers staying with us for years and years. We like to say, high-tech, no fees upfront, and very low-cost. They pay us for performance.” But, given that model, the company's financial health will be “totally dependent on knowing that our customers will stay with us year after year,” he adds.

Fortunately, that business model has paid off so far. In 2008, the company earned $139.5 million, a 40 percent increase over the $100.8 million in its 2007 revenues.

And at the end of April, athenahealth announced first-quarter 2009 revenues of $42.1 million, compared to $29.8 million in the same period last year, representing an increase of 41 percent. What's more, the company had been growing by 25 to 30 percent or more year over year, every year before 2008, Bush notes.

Stock analysts have a range of views about how the company's stock will perform in the coming months (see sidebar). But industry observers who follow public companies from within a healthcare-insider perspective see a fundamentally strong vendor going forward. Ben Rooks, principal, ST Advisors, L.L.C., a healthcare strategic advisory firm based in Evanston, Ill., says of athenahealth's executives, “I think they're a couple of years advanced beyond their competitors. The practice management-based vendors are all trying to move more to be service-focused. And Jonathan has done a great job of skating to where the puck is; he's really evolved his business extraordinarily well. Physicians don't want practice management systems; they want to get paid and to get their patients scheduled. And they don't want EMRs; they want systems that are easy to get into and out of. And I think Jonathan, better than most, anticipated that.”

Healthcare Informatics 2009 June;26(6):60-70

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