Athenahealth Paying Dearly to Take on Larger Rivals

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marketing spending to fight well outside of its weight class with respect to company size,” Hill says. Another challenge for Athena, he adds, is to convince larger medical provider organizations to agree to the same pricing structures that the company has been able to use with small- and mid-sized doctors practices. Athena typically charges its customers between 4 and 8 percent of their billing revenue, he says, depending on the number of services a customer is getting from the company.

In a recent interview, Bush, the chairman and CEO of Athena, gave a characteristically blunt and candid explanation of why his company’s expensive marketing drive is effective and necessary. “I’ve been waiting for Malcolm Gladwell’s tipping point for a decade and it still hasn’t come,” says Bush, who co-founded Athena in 1997. “So I finally said, ‘How about we advertise,'” he adds with a laugh. “And it turns out that works: We’ve had the largest lead volume we’ve ever had and the largest increase in lead volume we’ve ever had in our company’s history in [the first quarter], because we started really advertising. So screw the tipping point; I just want the business.”

Athena is also in a race with competitors to grow its tiny share of the electronic health records market. As part of federal stimulus passed last year, the U. S. government plans to spend $17 billion to provide Medicare and Medicaid incentives to doctors who adopt electronic health records under certain guidelines known as “Meaningful Use,” beginning in 2011. Athena launched its electronic health record (EHR) offering in late 2007 and as of March 31 had fewer than 2,000 physicians using the software to store their patients’ medical information. So the company has a lot of ground to cover to catch up with its EHR competitors such as Westborough, MA-based eClinicalWorks, which says it has a customer base of more than 40,000 health providers.

Still, Athena is able to get new users started on its Internet-based system quickly, in part because doctors don’t have to load the software onto their own computers or train their own IT staff to maintain it, John Hallock, a company spokesman, says.

The company caught the attention of some health providers last year when it announced a collaboration with Microsoft to integrate … Next Page »

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