Recent News:

University Hospitals’ Academic Medical Center Selects athenahealth’s Cloud-Based Revenue Cycle Management Service

Wisconsin’s Regional Extension Center Selects athenahealth as an EHR Value Vendor Partner

athenahealth Begins Collecting EHR “Meaningful Use” Dollars for Physicians

I asked Jeremy Delinsky, athenahealth’s Chief Technology Officer, a few questions about their business and his view of the SaaS market in 2011 and beyond.

Did you start out as a Software-as-a-Service company?

Jonathan Bush and Todd Park, our founders, worked together at Booz Allen Hamilton in the managed care practice and were interested in finding ways for medical practitioners

to deliver better outcomes for their patients. They decided to acquire a number of medical practices and create a new type of network. They started out in 1997 when they acquired a women’s health practice in San Diego, California called Athena Healthcare.

One big surprise for them was how difficult it was to get reimbursed by insurance companies, which put a lot of pressure on their business. When they started out they had no infrastructure and what they found was that there were not many practice management software solutions available that met their needs, so they built their own.

Todd then enlisted his brother Ed Park to build a web-based practice management system for athenahealth, which ultimately became our athenaCollector product. In 2000, we switched over from the physician practices and became a provider of software-enabled-services.

Why do your customers buy from athenahealth?

Our athenaNet product is a single-instance, multitenant software application platform that is used to deliver healthcare IT services. Specifically, we provide revenue cycle management (athenaCollector), electronic health record (athenaClinicals) and patient communications (athenaCommunicator) services through this platform.

We strongly believe that software-enabled services deliver more value to clients than software-only models. A good example of this approach is the difference between Amazon.com and Salesforce.com. Where Salesforce delivers industry-leading software, we think more like Amazon where we take superior software and bundle it with our people and best practices, which offers a more complete solution to our clients.

In terms of our services, our team regularly sends out medical claims, explanations of benefits, posts payments, calls insurance companies, manages the physician’s chart room, and faxes referrals and lab results on behalf of our clients. We really help our physicians and hospitals to transition from healthcare done on paper to the new Internet world. This means our teams are often data entering forms, classifying them or building out more efficient workflows. Our company spends a large amount in R&D but our core differentiation is grounded in services that improve our clients’ financial health and enable them to focus more energy on delivering care to patients.

Our mission is to be medical groups’ most trust business service by being the best in the world at getting doctors paid for doing the right thing for their patients. By offering superior technology and services, we free them from cumbersome paperwork and manual processes, enabling them to do what they do best.

Here are some quick reasons why our clients like our products:

• athenaCollector, our revenue cycle management service, is used by doctors to schedule patients and manage the entire revenue cycle. The work our staff does on our clients’ behalf in processing claims, managing denials and tracking payer rule changes through athenaCollector drives superior results for clients. Approximately 94% of claims are resolved on the first pass, compared to an industry average of only 65%, and clients’ days in accounts receivable are improved by an average of 37% after adopting athenaCollector.
• athenaClincials, our electronic health record (EHR) service, manages all patient health record information and processes clinical documentation on behalf of clients. Due to healthcare reform, this is a major area of change in the industry and regulations are constantly evolving. This is why a SaaS-based EHR has tremendous advantage over static software systems (whether on premise or hosted) that will need to be manually updated at an additional cost to clients. athenahealth excels because we can just update the rules once in our application, instantly updating all clients and at no charge. We call this “future-proofing” our clients and their practices.
• athenaCommunicator, our patient communications service, includes a patient portal, secure messaging to patients via email, phone and text, and a team of live operators to handle patient inquiries for practice staff. This allows for not only inbound but also outbound scheduling and communications that get patients back in the office, which builds additional revenue but more importantly improves the overall quality of patient care.

Overall, our clients like our services model because our interests are aligned; our revenue is directly tied to the doctor’s collections activity because we price our services as a percentage of total collections. This alignment of incentives means that we will intervene to make sure that our doctors are optimizing their time and efforts because it is in both of our best interests. This is also a big reason why our culture is very different from a traditional software company’s culture. We are passionate employees, called “athenistas”, with a vision to build an information infrastructure that makes health care work the way it should.

What do you see as the key trends emerging in the SaaS industry?

We believe that athenahealth is the only pure SaaS healthcare IT player in the market that is this service oriented. Healthcare reform has now fueled interest in SaaS and the government is pushing for more use of the “Cloud” and Web-native applications. Over time we have reflected on how best to deliver our services and we really think that offering software-enabled-services is the best business model for us and our clients.

An important trend we are watching is related to patients and doctors moving beyond browser-based solutions. As a result, we are actively looking into mobile applications, in particular those that foster social, business-to-business networking. People want to use iPads and iPhones but it is difficult to deliver complex business processes into these new form factors. We think these mobility trends will become increasingly important, as doctors and patients want to engage around improving costs and securing better outcomes. We are working on our own business-to-business social network through our athenaCoordinator initiative, formerly known as athenaCommunity, which facilitates the movement of patients through the health care supply chain.

Salesforce championed the platform play by allowing their customers to replace paper with electronic systems. We think that this same thing will happen with health information exchanges that will store and manage very large amounts of patient information and that standards based EDI approach will emerge. Over time we could definitely see traditional network effects take hold around information sharing, best practices and even patient referrals. Maybe one day these referrals could be done on LinkedIn or even Facebook leveraging their Cloud or SaaS infrastructure.

What is your outlook for 2011?

athenahealth has grown revenue at more than 30% per year for more than a decade. There is no denying that Web-native platforms and the “cloud” concept are gaining more traction in healthcare, in particular due to the need for better data exchange and the rapid pace of regulatory change. Due to these factors, we believe that SaaS models and the cloud are becoming the infrastructures of preference for healthcare. Given all of these changes in the market we feel very well positioned for continued success.