One year ago, it was announced that athenahealth would be acquired by private equity firms Veritas Capital and Evergreen Coast Capital for $5.7 billion – and merged with Veritas-owned Virence Health, the former value-based care arm of GE Healthcare.
The acquisition and merger marked the resolution of a long and challenging period for athenahealth – the once publicly traded cloud vendor founded in 1997 by Jonathan Bush and Todd Park – that began when activist investor Elliott Management bought a 9.2% stake in the Watertown, Massachusetts-based company.
For those who may have forgotten the twists and turns in the months between May 2017 (when Elliott began pushing athenahealth’s board to pursue “operational and strategic opportunities to maximize shareholder value”) and November 2018 (when then the $5.7B private equity acquisition was announced), there was no shortage of headlines during that period.
The company laid off 9% of its staff, closed some offices and sold its corporate jet. There was a major overhaul of the company’s structure. Former GE CEO Jeff Immelt joined athenahealth as its new chairman. Founding CEO Bush left the company amid allegations of past abuse. Pressure from Elliott ramped up, then brakes were pumped. There were multiple acquisition bids. Finally, the Veritas acquisition deal was struck, and was finalized this past February.
Now, with all that behind him, new CEO Bob Segert, who came to the company with the Virence merger, is ready to talk about the future. He spoke with Healthcare IT News about how athenahealth is embracing this fresh start, the new leadership team he’s helped put into place, the “good synergies” between athena and Virence products, its plans for innovation in cloud and analytics – and what customers are saying about the reshaped company.
Q. The past couple of years have been a pretty tumultuous time for athenahealth. Now that the ship has been steadied and it’s time to chart a new course, how are you finding things there in terms of morale and attitude about a new era for the company?
A. The company has been through lots of change. I think typically any time companies go through change, it causes all kinds of mixed emotions from people that you have to manage with the transformation.
The good thing, from our perspective, is we’ve had two very culturally compatible businesses, both very mission-driven, coming together. It’s all about helping people live more happy and healthy and productive lives. And at the core of Virence and the core of athenahealth, people are really dedicated that mission, and dedicated to that healthcare ethos.
So I think that’s helped us to bring the two cultures together, with their strengths on both sides. We’ve been building a new leadership team and getting the right skills from the right people in the right seats. And I think now that we’ve built that leadership team out, we’re now at a point where we’re really stabilizing the organization.
We’re harmonizing as one company. We have total rewards going out that are now harmonized amongst the two different businesses; they’re on the same benefits plan; everybody’s on Workday, in the same systems.
I think as we get closer and closer together from a systems standpoint and an email standpoint and all that work’s been done, I think we’re starting to really see the teams gel together and unite around our new vision that we’ve just released to the market, which is to create a thriving ecosystem that delivers accessible, high-quality and sustainable healthcare for all.
And I think having that new vision, that mantra out there with the combined teams is really starting to gain traction, and we’re seeing we’re seeing good overall morale and good overall expectations for the future of the company. So we’ve definitely turned a corner.
Q. Just so our readers are sure: Could you explain what the relationship and structure is between athenahealth itself and Virence? Are you guys one company called athenahealth now, or are there two divisions, or … how does it work?
A. We’re one company. All under the name athenahealth, headquartered out of Watertown. We have 5,300 employees now between the two businesses. We have added into the athenahealth family the Burlington, Vermont, and Seattle offices, as well as an additional site in Bangalore that was part of Virence. And all those offices are thriving and part of our overall community. So it’s a complete merger between the two firms and we’re operating as one brand and one company.
Q. And do you guys still have the campus up in Maine? I’m talking to you from Maine right now.
A. We definitely have the campus up in Belfast. It’s a major investment site for us. We’re definitely committed to Belfast. We have more than 800 employees in Belfast, and I think we may be the largest employer up there. We’ll continue to grow as we expand our revenue cycle management outsource solutions in the marketplace. So Belfast is core to us and will continue to be.
Q. Let’s talk about the new leadership team. You’ve made a bunch of high-profile hires recently. How do those folks fit into your plans?
A. First of all, I think we have a world class leadership team and I’m really excited to have people of the caliber of Paul Brient, who was the CEO of PatientKeeper, as our chief product officer.
And we just hired Luis Borgen as our CFO. He was CFO of DAVIDsTEA, he took that business public. He was a longtime financial executive at Staples in the Boston area, as that company experienced exponential growth in its early stages. He was a public company CFO at Davita, so he’s been around healthcare. He’s a military academy grad, very disciplined, very smart and dynamic, so we’re excited to have him as part of the team.
We also hired a new chief marketing officer named Simon Mouyal. He came to us from Medidata, so he comes from an analytics and data background and as we think about athenahealth and our SaaS-based platform as a data repository, and think about how we can actually leverage that data to improve health outcomes, he’s going to be a tremendous asset to us. He spent time at Rackspace as their chief marketing officer, he came up with the product marketing organization at Microsoft, so he’s been well-trained in software and in technology, and increasingly in analytics.
And we brought back a senior executive as our chief chief sales officer, a gentleman named Bill Conway, who had left athenahealth to go and run sales for American Well, another Boston-based company in the telehealth space. We were fortunate to lure Bill to join the team and to lead the other companies from a sales perspective. And he’s been doing a phenomenal job. He joined us in June.
So there’s kind of the four key significant leadership roles that we hired in, and now, combined with our legacy executives from Virence and athenahealth, I think we have a really solid leadership team. I’m very pleased with where we’re at today.
Q. Now let’s talk about products. As someone who’s been covering this space for almost 10 years now, it sort of gives me a bit of cognitive dissonance to hear “athenahealth” and “Centricity” used in the same phrase. How’s that working so far, integrating the legacy Virence technologies into the portfolio that was already there?
A. It’s a cliche. But I really do think there is a case here where one plus one is worth more than two. And I’ll tell you why: athenahealth is a historically SaaS-based platform, extremely focused on front-door medicine: the internist, the primary care physician, OB/Gyn, pediatricians – and then moving more and more toward specialty-based workflows and specialty practice areas. All on a very dynamic SaaS platform.
Contrast that, then, to the GE business, through Centricity, which focused on some of the larger multispecialty practices, and had a lot more focus on the hospital and acute care market, particularly with regard to revenue cycle management, with a software platform that was on-prem software or hosted.
But because those environments tend to be more complex, they tended to sell their solutions to, as I mentioned, multi-specialty practices. And the way to really win there is to have very strong specialty workflows.
So when you combine those two businesses together, you get a very strong front-door medicine, which generates about 80 percent of all the downstream healthcare dollars comes in the front door, and then you combine that with the very deep intellectual property of specialty workflows coming from the Virence classic or the GE Centricity business – coupled with the central billing office capabilities that exist within the Centricity business RCM platform, particularly around the hospital space, and you have a pretty dynamic portfolio.
The other thing I would say on top of that is that Centricity – and I was chairman and CEO of Virence before we’d renamed it and combined it with Athena – we were on a multi-year journey to actually transform those applications from premise-based solutions into SaaS applications. We called that project North Star. And the reality is that athena is North Star. It’s North Star delivered for our teams: As opposed to us having to do all that work, we now have a reference architecture and SaaS-based platform we can use as we think about these products going forward. So there really are a lot of good synergies between the two businesses.
Q. What are you hearing from clients on both sides? Either about things that they’re perhaps concerned about, or areas where they’re hopeful you can help them accomplish some things?
A. Well, just to start with a concern, one of them from the Virence customers is, “Are you going to sunset all my products?” I have been telling people, and I want to take the opportunity again: we are not end-of-service-lifing those Virence products. They’re core to our strategy. The customers we have who are on the Virence products are important to us. We’re committed to those customers, and we’re going to continue to support them into the future.
So that’s that’s the first thing we’re kind of hearing: “Hey, y’know, am I going to have to get off Centricity Business? Are you going to force me onto athenaOne? The reality is, while athenaOne is a brilliant, awesome platform, you do not have to move to athenaOne. You can stay on your current Centricity products. I think that’s probably the most important thing.
The other thing we’re hearing from customers, and I’m hearing it more as I go out, it’s just an understanding that the business is now stable again, we’re kind of through this activist investor period, the company is committed to results and outcomes. I think they’re seeing a customer team that is very customer focused, that is out in the field meeting with them, and frankly we’re seeing it in our attrition numbers. Our customer retention is up, and is a lot stronger than we had planned. We’re seeing a lot more of our customers stay with us and saying, “I like I like what you guys deliver, I’m seeing value and I want to stay with you guys. We’re seeing remarkably good performance there.
And our new bookings have really accelerated over the last couple of quarters. And we’re well ahead of our bookings plans for the year. So, y’know, so far the market is speaking with its wallet. And they’re staying with us and they’re signing up to more and more business at increasing rates. So we’re very encouraged by that at this point in the transformation.
Q. What’s on your to-do list as we head into 2020?
A. We’re focused on our release. We do three primary releases a year. Because we are a SaaS platform, we do update our code every night, we just toggle features on and off so they can be adapted by our customers. But we have three major releases, and our November release is the most recent and we’re we’re excited about that. And we’re in private planning for our next release, which will be our March release of 2020.
I think it’s an exciting time because we have Paul Brient on now, running product, working with our teams to really identify ways that we can extend and improve our clinical workflows. We’re doing a lot of work on AI and data analytics. We’ve just recently launched our data lake out into the marketplace, which basically abstracts all the data out of our tablespaces and actually makes it easier to use and access by our customers or other third parties through API gateways.
And the ability to be able to access that information and manipulate it and use it in ways that are really really powerful is a recent capability for us. We’re also excited about our business Praxify. We bought a company called Praxify, and we’re excited about actually embedding that now into our core offering. We’re just going to call it athenaOne, because that’s what it is. It’s gonna be part of our core solutions.
So we’re really excited about our new mobile offering, combined with the data lake, combined with the work we’re doing on specialty workflows. I think we have a pretty compelling product roadmap, and features that customers are getting excited about as we’re out talking to them.
Q. What else are you excited about at athenahealth, moving forward?
A. Because of our model, y’know, we do a lot of processing the backend rev cycle, and in this industry we’re still processing billions of faxes every year, right? One of the key things is how to get those factors out of the system, but that’s a that’s a longer conversation.
But because of all the document-intensity of charts and claims and explanations of benefits and remittances, all that paper has to be processed. We’re doing a lot of work on trying to take a lot of that labor out of that process.
And the way you can do that is to try to improve the auto adjudication rate on the claims. So we’re trying to use machine learning and AI technologies to try to do some of that matching. If you take a human out of that matching process and you let machines start to do that, you can improve that match rate and you can improve accuracy. And then you can get things to flow on a straight-through basis with no human touch.
We have pilots out and things that are working with some technology vendors and other partners where we’re actually starting to process more and more of our claims on a straight-through basis without any human manual intervention, and that’s that’s all driven by machine learning technology.
So that’s one area where we’re putting in a lot of effort, and frankly we think we have a lot more opportunity to continue to improve that and to drive efficiency and quality. It’s always better – at least from my experience as a longtime software-as-a-service executive – it’s always better when machines talk to machines. Because machines don’t make human errors. If we can use technology to help improve that process we can get higher-quality, higher throughput and ultimately lower cost and more value for our customers. So that’s a key priority for us.
Q. Closing thoughts?
A. The only thing I’d say is, athenahealth is back. We’re seeing strong momentum in the market from new sales. We’re seeing our customers with a vote of confidence, staying with us at increasingly high rates. We’ve got a full leadership team in place. We’ve got investors that are committed to growing the business and investing in the business, and want to really help us drive this mission of creating a thriving ecosystem that delivers successful high-quality and sustainable healthcare for all. We’ve got a team that’s committed to that and I think you’re going to continue to see more momentum for us in the market.
Email the writer: [email protected]
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