Facing an increasingly saturated electronic health records market, software vendors like Athenahealth are under increasing pressure to consolidate and seek out new avenues for revenue and growth.
Most healthcare organizations already have EHRs in place, and vendors can no longer count on major growth from new installations alone. That's spelled lower bookings year over year for some. Ever since Athenahealth began reporting quarterly bookings, it's reported lower year-over-year booked business. And in the second quarter of the year, Allscripts also had a dip—32%—in booked business.
"They're now faced with the question of how to continue to be successful and grow," said John Kelly, principal business adviser for Edifecs. "The way to do that is to consolidate."
Athenahealth is now the latest company to take that tack. On Monday, two private equity firms announced they plan to buy the vendor for $5.7 billion. Veritas Capital and Elliott Management's Evergreen Coast Capital will combine Athenahealth with Virence Health Technologies, a former GE Healthcare company.
Unlike the other big EHR vendors, Athenahealth charges its customers a percentage of receivables rather than a set price. The company was also a leader in the cloud, offering cloud-based software while other vendors were focused more on traditional, server-based EHRs. Now, the majority of provider organizations are either currently hosting or are considering hosting their data off-site, according to KLAS Research.
But some question the company's ability to compete in the EHR market, especially with larger providers. In 2017, Athenahealth had just 2.1% market share for U.S. acute-care hospitals, according to KLAS, while Epic had 26.7% and Cerner had 24.8%.
"Athenahealth really is a revenue cycle management vendor and not really a strong competitor in the clinical market," Kelly added. "Maybe they would have been if Jonathan (Bush) had stayed."
Bush left the company in June after reports of sexual harassment surfaced and it was made public that Bush had attacked his now ex-wife during their marriage.
Bush also faced business challenges. "He was able to build the company as a disruptor because he has a disruptor personality," said Michael Burger, senior consultant at Point of Care Partners. "But at some point, a company grows so big that it needs to be run like a company, as opposed to a small business. The company outgrew Jonathan's leadership."
Some are concerned that Athenahealth's freewheeling culture and its influence on the industry may not survive this deal.
"I'm worried about the impact this will have on creative disruption," said David Muntz, a healthcare consultant and former principal deputy national coordinator at the Office of the National Coordinator for Health Information Technology.
But the Athenahealth brand is, at this point, still strong.
Consolidation isn't without its challenges. When companies merge, their platforms don't necessarily get combined at the same time, according to Point of Care Partners' Burger. So the newly formed companies must maintain multiple platforms. Allscripts, for example, maintains distinct Practice Fusion and McKesson platforms post-acquisition.
"It's just not easy to get customers to move to one or the other platform," Burger said. "You would think the idea would be to move everyone onto the Athenahealth platform, because the GE platform is pretty old," he added. But based on what's happened with Allscripts and other acquiring companies, that's not likely, he said.
EHR vendors that maintain separate platforms can struggle. A year after Cerner acquired Siemens Health Services, for example, 87% of users of Siemens' EHR said they planned to leave the platform, according to KLAS.
There's also the matter of data integration. "The overall goal is to focus on how to collect data from all the appropriate sources and then use it when you're looking at patients, payers and providers," Muntz said. "The challenge is how they're going to deal with integration of the data and the processes to improve the overall workflow for the providers and payers."
