(ATHN) Athenahealth Progresses with Federally Qualified Health Centers

Leading vendor of cloud-based EHR and other services for medical practices, Athenahealth (ATHN) recently revealed that it will meet the requirements of two Federally Qualified Health Centers (FQHCs), namely Community Health Programs and Manet Community Health Center. The inking of these two deals is subsequent to Athenahealth’s implimentation of its services at Three Lower Counties Community Services and Hudson Headwaters Health Network.

As community based and federally funded entities, FQHCs provide primary care to all age groups, irrespective of a person’s ability to pay for care. Community Health Programs is a multi-location FQHC in western Massachusetts. Manet Community Health Center is another multiple location FQHC based in North Quincy, Massachusetts. Both FQHCs are slated to implement Athenahealth’s range of offerings comprising athenaCollector, athenaClinical and athenaCommunicator.

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 to 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) to 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, 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 athenaCoordinator.

The company 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 practices.

Athenahealth has geared itself for the enterprise segment through its strategic alliance with Microsoft (MSFT) and the acquisition of Proxsys, both in 2011. The company has recently signed on, and executed several enterprise-sized deals, which provide it with a credible and reference-able client base.

Though the federal stimulus will gradually wind down, the replacement market is growing. Competition is fierce and larger competitors may benefit from the incumbency factor. Industry stalwarts, such as Cerner (CERN), offer long-standing seamless products integrating inpatient and ambulatory-care systems. Quality Systems (QSII) and Allscripts Healthcare Solutions (MDRX) are two other well-known competitors in a crowded field.

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