Most doctors in the U.S. have never heard of Athenahealth, the Watertown, MA-based firm offering Web-based software for managing billing, electronic medical records (EMRs), and other functions in physician practices. But the federal government plans to invest $19 billion to make funds available for doctors to switch from the usual paper-based systems to electronic medical records, giving them a new reason to learn more about Athenahealth (NASDAQ:ATHN) and its offerings. I caught up last week with Jonathan Bush, the outspoken CEO of Athenahealth, to get the lowdown on how the company is seizing this multibillion-dollar opportunity.
Bush, the first cousin of former President George W. Bush, has his doubts about the program. For one thing, the $19 billion isn’t a lot of money for its ambitious purpose, and for another he says that he wants to know what specific standards doctors will be held to in their use of federally subsidized electronic medical records. The $19 billion is part of the broader, $787 billion stimulus package passed in Congress last month. Some of the details such as a murky requirement that doctors will have to show “meaningful use” of electronic records to get the federal dollars have yet to be fully explained. Athenahealth is hoping that the requirement means doctors will have to actually use the electronic records and integrate them into their practices, playing into the company’s strengths in providing software and online services that touch multiple aspects of medical practices.
In any case, doctors are going to get a bigger dose of Athenahealth and its chief executive. The firm revealed during its earnings call last month that it plans to increase its investment in sales and marketing this year. And here’s a link to Bush’s colorful TV appearance two weeks ago on CNBC.
The interview below captures Bush’s thoughts about the $19 billion that the government plans to inject into his industry and its likely impact on Athenahealth. (And if you can’t tell from the interview, Bush hints that he has some obvious philosophical differences with the stimulus package.)
Xconomy: Do you think the government’s spending on EMRs will be effective?
Bush: Obviously, the standards are still up in air in terms of how tough the government is going to be in requiring demonstration of meaningful use. So if the government is a bunch of pushovers, then it won’t push much adoption. And if the government is tough, it will create a platform that could push adoption.
The truth of the matter is that this isn’t a lot of money in terms of the microeconomics of an individual doctor’s office and the federal money they will receive to pay for the EMRs. It’s some money, but it’s not enough in and of itself to drive EMR adoption.
X: What impact will this stimulus spending have on Athena?
Bush: The tougher it is to get the money the better it will be for Athena compared with other EMR companies, because we are fundamentally oriented towards providing services to help doctors offices get paid—and EMR companies aren’t. They are totally disconnected to their customers. So if this “meaningful use” looks anything like what the government has said in the past, in the Physicians Quality Reporting Initiative, then it’s going to be an absolute runaway boondoggle for Athena. And if it doesn’t include those reporting requirements, then it will be good for Athena but not much better than it is for other EMR companies. Either way, we’re expecting increased demand for our clinical services.
X: What differentiates Athenahealth from other firms that offer EMRs?
Bush: The big deal for us is that we go to market with software enabled by a service. We give away the software and we sell the business results. In the case of billing, we give away the software and then we go get the money and charge them a percentage of the payments. In the case of an electronic medical record, we give away the medical record and then go get the chart data from the laboratory and the pharmacy and the hospitals and charge for that. We believe that the way you get adoption is not waiting for the government to give something to you, but you actually do something useful for the government—so our job is to reduce the doctors’ operating costs and increase collections.
X: In the end, is this stimulus plan for EMRs going to work?
Bush: I certainly don’t think it will get all the doctors in the country onto EMRs by 2014—not even close. But if a quarter of them adopt EMRs as a result of the stimulus that would be unbelievable. We’ll have to choose a different time to have a meeting on whether I think this is good public policy [laugh]—but it sure is good for Athena.
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