EM Emdeon Inc. Class A Common Stock

Leading vendor of cloud-based services for physician practices Athenahealth (ATHN) recently reported that Alexian Brothers Health System, a Catholic healthcare entity providing health care in the Chicago region, has further grown its relationship with Athenahealth. It has chosen the cloud-based electronic health record (“EHR”) offering, athenaClinicals and patient cycle management product, athenaCommunicator, to improve overall coordination of care.

By adopting athenaClinicals, Alexian has procured a flexible EHR service that will function in an integrated manner with athenaCollector, its legacy cloud-based billing and practice management offering. Alexian stated that Athenahealth’s strategy of providing support day by day lends credence to its belief that it is set to achieve better coordination and delivery of care.  

Alexian will also adopt athenaCommunicator to improve interaction with patients either initiated by its staff or triggered by automated schedules within athenaNet, the company’s cloud-based platform. This offering will provide benefits such as - greater accessibility for patients after office hours, reduced no-shows and hassle-free patient payments.

Athenahealth established, in September 2011, an online dashboard reporting on physician performance related to meaningful use requirements. Viewers at this regularly updated dashboard can witness how thousands of health care providers are progressing toward satisfying all Medicare meaningful use parameters.

Athenahealth’s web-based deployment provides a low-cost scalable service while its flexible rules lead to higher efficiency in claims settlement. The Software-as-a-Service (SaaS)-based approach allows for a more flexible delivery mechanism that is expected to help Athenahealth win deals. The company has traditionally enjoyed high customer satisfaction rates, which facilitate a larger number of referrals.

Athenahealth’s unique business model makes it a strong provider of revenue cycle management (“RCM”) services (athenaCollector) to small physician practices. Its EHR product (athenaClinical) is a key player in ambulatory settings. We believe that sales of athenaClinical are likely to remain robust, given the opportunity for physicians to earn incentive payments under the federal stimulus.

The company should benefit from its extensive athenaCollector client base, as only a minority of its subscriber base also utilizes athenaClinical. 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 earlier 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, which also includes low-end players such as Emdeon (EM).

 
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