Athenahealth: The Quest to Unbreak Healthcare
Can athenahealth ease the burden for small and medium size physician's offices?
In 1997, Jonathan Bush and Todd Park opened a woman’s health and birthing practice, where they were constantly struggling with denied or unpaid claims from insurers. Insurance companies have a complex claims system that made it difficult for doctors to navigate, and with everything being done by hand, often claims would get caught up in the system.
Indeed, International Data Corporation (IDC) research consistently points to healthcare as one of the most paper-intensive industries in the US. With limited resources and a huge concern for patient privacy, hospitals and providers have been cautious in making the transition to the digital age [1]. Healthcare is a trillion-dollar industry, and its main employers studied medicine, not business or finance. Considering that the healthcare industry is heavily regulated and documentation is imperative, the market opportunity is massive for digitization. [2]
In a paper industry, it’s not only difficult to track patient’s health records, but to maintain records of payments with payers and insurance companies.
“Because you’re a doctor, not a billing expert” [3]
Since Bush and Park’s business was falling apart, they decided to take on the insurance companies, and they formed athenahealth Inc. This new software company was designed to track insurance claims and manage payments to ensure that doctors were paid and claims would not be lost [4].
Athenahealth has a strong business model for removing the administrative pain point for doctors associated with different health plans. At the core of its business model, athenahealth doesn’t get paid unless doctors do. They claim an average of 6% increase in collections, and take a percentage of payments their client receives [5]. The pricing structure illustrates clear alignment of physician goals and athenahealth revenue model: If the doctor doesn’t get paid, athenahealth doesn’t get paid.
Over the past 20 years, Athenahealth has become much more than a software company fighting insurance battles. They have grown into a company that offers incredible tools that allow doctors and health providers an improvement in the way that they connect with patients out of the medical office.
The cloud billing and practice management system software has become known as athenaCollector. Recognizing that this platform was a huge untapped market, athenaheath expanded to further service physicians by offering athenaClinical and athenaCommunicator.
AthenaCommunicator is the way athenahealth helps doctors to keep patients engaged in their own healthcare. It consists of a medical scheduling system that has led to a decrease in no-shows and last minute cancellations. Patients can use it to schedule appointments, pay bills, or reach out to their health provider [6].
AthenaClinical is the Electronic Health records (EHR) system. EHRs allow doctors to connect with more patients, while still increasing the quality of care they are given. Doctors can access patients charts remotely, alert them of critical lab values or potential medication errors, and connect patients with their own health records in a safe a secure manner. For a patient who may see specialists or other doctors within their network outside of their primary care, it allows each of the doctors to see the entire history, and provide better diagnosis and treatment options. [7] To further streamline their EHRs Athenahealth has incorporated epocrates, a mobile drug reference, into athenaClinical. This allows doctors to easily look up appropriate dosing and contradiction when prescribing medicine.
The Future for athenahealth
In 2014, the American Recovery and Reinvestment Act mandated that all public and private healthcare providers adopted the use of electronic medical records to maintain Medicaid and Medicare reimbursement levels [8]. That same year, 74% of sales represented customers who bought all three options and athenahealth saw significant growth in revenue, proving that both their business and operations models were successful.
Like many healthcare companies, the presidential election of Donald Trump has left many wondering if they will be left scrambling. Athenahealth has profited from the Affordable Care Act quite a bit, but their CEO Jonathan Bush is not worried about Trump’s promise to repeal Obamacare. “We’re going to have the laws that we have. We’re going to have the regulations that we have. There’s going to be a lot of chatter about blowing them up. Nothing’s going to happen. And then it will be up to the players in the market to innovate” [9].
If Bush’s bullish outlook proves to be incorrect, it could really slow the adoption of athenahealth’s various platforms. Analysts were predicting longer sales cycles for the company and slowing topline growth before the results of the election [10]. It would be wise for athenahealth to consider improving its customer acquisition strategy since a government mandate may no longer be part of the sales pitch.
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[2] http://www.healthcareitnews.com/slideshow/inside-athenahealth-numbers?page=2
[3] athenahealth.com
[4] http://www.wsj.com/articles/SB117141549626107896
[5] http://www.businessinsider.com/how-athenahealth-became-a-wall-street-debate-2014-7
[6] http://searchhealthit.techtarget.com/definition/athenahealth-Inc
[7] http://onlinelibrary.wiley.com/doi/10.1111/1475-6773.12135/full
[8] http://www.usfhealthonline.com/resources/healthcare/electronic-medical-records-mandate/#.WC5yVaIrLVo
[9] http://bostinno.streetwise.co/2016/11/10/athenahealth-ceo-will-trump-repeal-obamacare-unlikely/
[10] https://finance.yahoo.com/news/industry-wide-changes-catch-athenahealth-181316208.html
This article is very interesting! Thanks for teaching us about athenahealth’s payer delivery model. I hope more models like these are part of the future of healthcare. Athenahealth provides a strong balance of checks, incentives and collaboration between payers and providers, which is necessary in a healthy healthcare system.
Athenahealth is a quintessential example of the products of the ACA and its incentive system: EHR systems, experimentation with innovative payer/provider models, cloud billing systems, value based healthcare, and new services to help bridge the gap between payers and providers. If the ACA falls, it will be hard to see the role for companies like these and their paths toward innovating the health system. A lot of healthcare business leaders are afraid the work being done here and with the Center of Medicare Services Innovation center will be lost. Athenahealth discusses its ACA-enabled projects here: http://www.athenahealth.com/knowledge-hub/practice-management/healthcare-payment-reform.
Thanks for the interesting article! The ACA provides many incentives to generate value for all parties involved in the care delivery chain and Athenahealth is an example of that.
If Trump indeed chooses to repeal the ACA, the impact on innovation in value healthcare might take a hit as the ACA has created multiple incentives to develop value sharing. Although this may impact Athenahealth’s future incentive to further innovate, their current system may benefit as with the repeal of ACA there may be more small and medium sized physician’s offices remaining in practice rather than merging with larger care conglomerates. It will be interesting to see how this plays out!
Athena’s business model adds a lot of value to physician practices, regardless of the ACA. I can’t imagine that they will be that impacted by a potential repeal/modification of the ACA. Bush saw the opportunity to support private practices in their billing in 1997, far before the conception of the ACA. While I do agree that a lot of their growth was due to the push to move to EHR, etc., I don’t think that the industry would like to go back to paper claims and the pain of collector overhead.
I think the longer term risk to their business model is the consolidation of private practices into larger medical groups. A lot of private practice physicians who have struggled with the challenge and costs of billing and upgrading their systems have sold their practices to larger medical groups that can support the overhead and bypass Athena.
Thank you for this post. You mention that “AthenaClinical is the Electronic Health records (EHR) system. EHRs allow doctors to connect with more patients, while still increasing the quality of care they are given. Doctors can access patients charts remotely, alert them of critical lab values or potential medication errors, and connect patients with their own health records in a safe a secure manner.”
Given that data security is a big challenge in IoT and therefore, especially so in digital health (see https://krebsonsecurity.com/2016/10/europe-to-push-new-security-rules-amid-iot-mess/ and http://www.businessinsider.com/hospitals-are-becoming-targets-for-hackers-thanks-to-poor-security-2016-4), is Athena doing anything to prevent hacks into its record databases? I would imagine this to be a critical concern for them given a core part of their business model depends on it.
Thanks for this article! Agree that revenue cycle management for small/medium sized providers has a ton of value in today’s healthcare system, but what does athena do that differentiates themselves from other players in the market?
Agree with TCG that the recent trend of provider consolidation is bad for athena, especially hospitals acquiring smaller physician practices, as hospitals typically have much more sophisticated billing departments vs. smaller practices.