Athenahealth Does Well in Oklahoma

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Leading vendor of cloud-based services for physician practices and inpatient settings, Athenahealth, Inc. (ATHN) recently reported that INTEGRIS Health of Oklahoma will utilize its cloud-based offerings to coordinate care, communicate with patients, centralize revenue cycle management and gauge care and productivity.

INTEGRIS Health is the biggest health system in Oklahoma. It runs 100 rehab centers, clinics, mental health centers and other facilities beside 11 hospitals. The system employs over 300 doctors.

By utilizing Athenahealth offerings, INTEGRIS will shift toward a centralized structure that will enhance returns on investment. INTEGRIS will improve scheduling of patients besides enhancing coordination between primary and specialty providers.  

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 helps 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 (athenaClinicals) is a key player in ambulatory settings. We believe that sales of athenaClinicals are likely to remain robust. In addition, the company will harness its newer products, namely athenaCommunicator and athenaCoordinator.

Athenahealth should benefit from its extensive athenaCollector client base, as only a minority of its subscriber base also utilizes athenaClinicals. 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 establish itself in the enterprise segment. The company has recently signed on and executed several enterprise-sized deals, which provide it with a credible and referenceable client base. In Mar 2013, Athenahealth completed the take over of Epocrates, a provider of point-of-care digital solutions in the healthcare industry. The acquisition will enable Athenahealth to increase its user network and improve its brand awareness.

Though fresh opportunities are shrinking, the replacement market has been growing. Competition is fierce and larger competitors may benefit from the incumbency factor. Industry stalwarts such as Cerner Corporation (CERN) offer long-standing seamless products which integrate inpatient and ambulatory-care systems. Allscripts Healthcare Solutions, Inc. (MDRX) is another player in a crowded field.

We currently have a Zacks Rank #3 (Hold) on the company. However, we are more positive about other stocks such as Merge Healthcare Incorporated (MRGE) which carries a Zacks Rank #2 (Buy) and is expected to do well.

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