(ATHN) Athenahealth Achieves High Attestation

Leading vendor of cloud-based services for physician practices – Athenahealth (ATHN) recently revealed that 96% of its concerned providers were successful in meeting the attestation requirements of 2012 Medicare Meaningful Use Stage 1, Year 1. The company’s performance in 2012 leverages on the 85% achieved with regard to 2011 Medicare Meaningful Use Stage 1, Year 1. It is also twice as successful as the industry-wide mean in the low 40% range.

Following the passage of the HITECH Act, Athenahealth has collaborated with its customers to make sure that they are in accordance with the provisions of the Medicare and Medicaid incentive programs. The company’s Electronic Health Record (EHR) in the clouds gives ATHN on-time knowledge about provider performance. This allows the company to address problems and bottlenecks faced by its customers. Athenahealth provides a resource center for Meaningful Use, the sole federal incentive guarantee for EHR and a set of experts who help clients derive benefits from Meaningful Use.

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 enter the enterprise segment through its strategic alliance with Microsoft (MSFT) and the acquisition of Proxsys, both completed in 2011. The company has recently signed and executed several enterprise-sized deals, which provide it with a credible and referenceable client base. In early Jan 2013, Athenahealth signed a definitive agreement to take over 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 the federal stimulus is winding down, 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 integrates inpatient and ambulatory-care systems. Allscripts Healthcare Solutions, Inc. (MDRX) is another competitor in a crowded field. Athenahealth carries a Zacks Rank #3 (Hold).
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