With acquisition athenhealth seeks to lure big hospitals

By Ethan Andrews, The Republican Journal Reporter

WATERTOWN, MA (Oct. 7): On Oct. 5 athenahealth, Inc. announced that the company would acquire Anodyne Health Partners, a Georgia-based, "software-as-a-service," business information technology company. According to a press release from athenahealth, the company anticipates closing the $30 million deal this month.

Speaking on CNBC Oct. 6, athenahealth CEO Jonathan Bush summed up the benefits the acquisition would bring to athenahealth. "Two words," he said, " 'awareness' and 'entry'."

"The lion's share of our growth has been hospital systems that are acquiring doctors left and right as they [private-practice physicians] give up the ghost when all the regulations start coming at them," Bush told the CNBC host.

Anodyne Health Partners has 14,000 physicians under contract and deals primarily with large hospitals. The company's proprietary software is designed to help large, complex businesses understand their own financial mechanics. After the acquisition, Bush said he foresees athenahealth using Anodyne systems to get a foot in the door with big hospitals overwhelmed with making the transition to electronic records.

"We can say, 'You know, if you were on the Web, this would be over for you,' " he said, relating the statement to highway billboards that appeal to weary commuters, reading, "If you lived here, you would be home now."

Bush noted that large integrated hospital systems are on the rise, and with that trend, athenahealth will have to serve not only private-practice physicians but "hospital-owned" doctors too.

Anodyne will continue to operate as a distinct brand name, according to the press release. athenahealth will incorporate some of the acquired company's technology into its own systems.

athenahealth has flourished since opening offices in part of the former MBNA complex in Belfast in early 2008. At the conclusion of its first year in Belfast, the company had hired 40 percent more employees than planned. Since Nov. 2008, athenahealth's stock prices have doubled, from $19 to $38 per share.

athenahealth Manager of Public Affairs and Corporate Communications John Hallock said the Belfast offices would be unaffected by the acquisition.

Hallock likened the current deal to athenahealth's 2008 acquisition of MedicalMessaging.net. Both were small Web-based companies that were judged to work well with athenahealth's core platform, he said.

Bush told CNBC he is holding out hope for the High Tech Act, a facet of the American Recovery and Reinvestment Act directed at converting paper medical records to electronic records. While commodities can be built from mortgages, credit card applications and bank machine transactions, Bush said, no such system exists for the paid exchange of medical information.

"If they [the federal government] primed the pump by paying for exchange of medical information, there would be real reform," he said.

Hallock elaborated on Bush's message. Many medical facilities use legacy-based software — outdated systems that still perform a useful function but become increasingly expensive to maintain. If the High Tech Act gets watered down, Hallock said, the money could be wasted on costly updates to the old systems instead of a transition to Web-based services like those provided by athenahealth.