Leading vendor of cloud-based services for physician practices and inpatient settings, Athenahealth, Inc. (ATHN) recently reported that it will guarantee ICD-10 compliance for new customers who come on stream prior to Jun 30, 2014.
In other words, fresh Athenahealth customers on athenaCommunicator, athenaCollector and athenaClinicals offerings will be in accordance with ICD-10 (before the deadline) or else the company will abstain from charges until the benchmarks are achieved. Incidentally, ICD-10 is an up-to-date collection of diagnosis codes that medical practitioners must utilize by Oct 1, 2014.
The recent annual survey conducted by Athenahealth and Epocrates revealed that about a third of doctors were not confident of their capability to satisfy ICD-10 requirements. Hence, Athenahealth is taking steps to ensure ICD-10 preparedness for physicians.
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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