Leading vendor of cloud-based services for physician practices
and inpatient facilities
) recently reported it had inked a definitive agreement to take
over Healthcare Data Services (HDS). The deal is expected to close
in October 2012.
HDS, based in Boston and conceived in 2004, is a provider of
offerings on the web with expertise in population health management
and analysis of health care information. It provides a composite
analysis of health care data. Consequently, the takeover is
likely to enhance Athenahealth's offerings to include
population-oriented quality and cost data and reporting ability.
Athenahealth will bolster HDS' ability to help health care entities
manage risk-based payment plans and tailor the requirements of the
population with the care provided to them.
Athenahealth is expected to benefit from the take over of HDS in
several ways such as progress toward a health data open exchange,
synergies and economies of scale, growth in enterprise segment and
creation of a winning platform amidst payment reform.
Risk-based contracts provided by health plans intertwine quality of
health care with reimbursement and eventually lead to global cuts
in healthcare expenditure. Such contracts are available in several
formats such as bundled payment and pay-for-performance.
Athenahealth's web-based deployment provides a low-cost scalable
service while its flexible rules engine leads to higher efficiency
in claims settlement. The Software-as-a-Service (SaaS)-based
approach allows for a more flexible delivery mechanism that is
expected to help Athenahealth win deals. The company has
traditionally enjoyed high customer satisfaction rates, which
facilitates a larger number of referrals.
Athenahealth's unique business model makes it a strong provider of
RCM services (athenaCollector) designed for small physician
practices. Its EHR product (athenaClinical) is a key player in
We believe that sales of athenaClinical are likely to remain
robust, given the opportunity for physicians to earn incentive
payments under the federal stimulus. In addition, the company will
harness its newer products, namely athenaCommunicator and
The company should benefit from its extensive athenaCollector
client base, as only a minority of its subscriber base also
utilizes athenaClinical. Cross selling represents a real growth
opportunity in the near term. In this regard, Athenahealth has made
rapid strides in capturing the EHR business of physician practices.
However, this segment is shrinking, as hospitals increasingly
absorb physician's medical practices.
Athenahealth is geared to enter the enterprise segment through its
strategic alliance with
) and the acquisition of Proxsys, both completed in 2011. The
company has recently signed on, and executed several
enterprise-sized deals, which provide it with a credible and
referenceable client base.
Though the federal stimulus will gradually wind down, the
replacement market has been growing. Competition is fierce and
larger competitors may benefit from the incumbency factor. Industry
stalwarts such as
) offer long-standing seamless products integrating inpatient and
Allscripts Healthcare Solutions
) are two other well-known competitors in a crowded field.
We have a long-term Neutral recommendation on Athenahealth. The
stock currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating.
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