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Athenahealth, Inc. (ATHN) Message Board

  • tradingmatrixtfg tradingmatrixtfg Aug 25, 2010 11:53 AM Flag

    bear case continued

    Hospitals are driving EHR adoption, not doctors. The future of digital medicine will require a common infrastructure that facilitates the seamless sharing of information and it will be the large enterprises that define that infrastructure. Athena does not focus on the “hubs” of the US healthcare system, the inpatient facilities (e.g. hospitals, nursing homes, rehab facilities), instead they focus on the “spokes”, the independent doctors in private practice, which, as we discuss below, is a shrinking part of the healthcare landscape. This is quite clear from ATHN’s ratio of providers per client account which was 14.8 as of Q109 and has dropped to 14.1 as of Q210. If ATHN were successfully tapping the enterprise market, then this ratio would be increasing not declining. Regardless of the company’s efforts to “Intensify efforts to expand the enterprise sales pipeline”, the numbers speak for themselves. ATHN, in their 2Q10 earnings release, discusses how they plan to add 30 salespeople, “In terms of our sales force, we have added 12 new quota-carrying sales representatives year-to-date, and we currently plan to add approximately 18 quota-carrying sales representatives by year-end. Most of these reps will join our small practice sales force.” Another example of how the company is barking up the wrong tree as far as EHR goes. Hospital systems have launched programs to drive the adoption of EHR among their affiliated physicians. This will “coordinate patient care, reduce unnecessary tests and cut down on medical mistakes”, thereby lowering costs at hospitals and helping them to meet Pay-for-Performance (P4P) quality metrics included in the health reform legislation; ATHN is missing the boat here, marketing directly to doctors, essentially competing with hospitals which will also be pushing their choice of EHR on the doctors. The recent merger of Allscripts and Eclipsys emphasizes this trend as was discussed on their conference call, “It is about the shift that we see and more and more physicians becoming employed by hospitals. And those hospitals using the Stark safe harbor exemption are actually starting to organize the market and drive adoption, and that is really the reason for this [merger].”

 
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