Afterburner (af·tər′bər·nər) n.
- A device for augmenting the thrust of a jet engine by burning additional fuel in the uncombined oxygen in the gases from the turbine
- The augmentation of thrust obtained by afterburning may be well over 40% of the normal thrust and at supersonic flight can exceed 100% of normal thrust
athenahealth is one of my favorite companies anywhere. I believe they have a great vision, a highly capable team, an incredible business model, and an unprecedented business opportunity before them. However, for all the amor, I have been disappointed that even with all their blistering success (Bam, Bam, and Kabam!) they have captured less than 2% of the target market since the IPO. I am not just disappointed for them but for the entire ambulatory care space which doesn’t seem to readily get the value of the collective intelligence inherent in the network.
In November 2007, I attended a technology conference with Jonathon Bush in the LA area. Jonathon was in rare form that day (probably trying to get psyched for his WFC battle with Allscripts CEO Glen Tullman which never materialized – Glenn was a no show) and I challenged him to get serious about getting his software in the hands of as many physicians as possible. We had an animated 45 minute banter on how this could actually happen. He asked me to write up the proposal I drafted on the back of a napkins that were doubling as our ad hoc whiteboard. I think he briefly considered it, but the business focus and the upcoming IPO made it just a passing interest. Now, nearly two years later, I still think what I wrote is highly relevant and could be highly very useful in helping athenahealth rapidly expand their current book of business.
My pitch to athenahealth, then as now, is to turn on the AFTERBURNERS by opening up the platform:
November 6, 2007
- “Software is Dead”
- “The Network is Nirvana”
- “Features/Functions” vs. “Collective Intelligence”
- “Revolutionary Model” and “Army of Messengers”
AthenaHealth is the hottest health care information technology on the planet as I write this. The recent oversubscribed IPO has been sequentially followed by exceptional national press coverage, impressive recent customer wins, and an ongoing run up in the stock price.
This unprecedented public launch is another confirmation of Athena’s compelling business model. Athena provides back office automation software that leverages a proprietary claims database and workflow engine that dramatically reduces the inefficiencies of medical practice finances. As a result of this technology, Athena has been able to provide medical practices with real-time information on claims, cash flow, and financial optimization. By focusing on the revenue cycle management service, Athena knows first hand how relevant clinical information is the creation and management of financial information. In order to more effectively capture that information, Athena recently launched AthenaClinicals, their web based EMR which complements their web-based AthenaCollector software. Because Athena’s business model is based on revenue cycle management, and the clinical software is a means to acquire better financial data, Athena does not have to charge money for the software itself and choose to sell it as a service. In fact, since the revenue model at AthenaHealth makes money off the increased collections, Athena is willing to go at risk on implementations.
This representats one of the new school business models and an evolution of the Software Value Chain evolution. Furthermore, due to its architecture of participation, each new practice becomes a contributing member of the Athena Network. This Network effectively creates a natural “collective intelligence” and collective experience around best practices, insurance rules, and financial optimization. Because Athena was conceived as a “Software as a Service” company and because the revenue model does not involve software licenses, the value of AthenaClinicals does not reside in the features/functions, but in its ability to gather bits and bytes. The greater the ability to gather bits and bytes, the greater the ability or opportunity to generate revenue streams. It therefore stands to reason that the more broadly your bits and bytes gathering ability is distributed, the more opportunity you will have to generate revenue. Why not have as many doctors as possible using AthenaClinicals by making if freely available for their use?
This decision would allow you to reap the whirlwind of innovation, while still protecting all your proprietary knowledge and intellectual property within Athena Collector and Athena Enterprise applications. Access to the Network would continue to be on a subscription basis but you would open up development and collaboration opportunities which you have not previously contemplated. The Athenista’s will be celebrated as hero’s, an appreciative community would form and become a veritable “army of messengers”, and I believe you would continue to force disruptive change within the industry. Based on your successful business and your successful brand, I believe that you could accelerate the creation of a public good that you have previously discussed by engaging a worldwide public of developers, users, and potential customers.
Specific and tangible additional benefits would include:
- Get the benefit of solidify your message that “Software is Dead” and the “Network is Nirvana”
- Get the benefit of a huge branding and buzz opportunity
- Get the benefit of expanding the number of potential developers of the software
- Get the benefit of expanding the number of potential users of the software (decrease adoption impedance)
- Get the benefit of having a larger installed user base to upsell your professional version and access to AthenaNetwork
- Get the benefit of collaboration from partners, players, and payers that you have currently not contemplated
- Get the benefit of co-announcing and co-branding with Red Hat and/or Ubuntu to leverage up on the ongoing buzz associated with Linux
- Get the benefit of creating a community, neigh an entire nation of Athenista’s, who plug into the network effect which you have amplified.
I have struggled to find a compelling reason not to do it. Most companies struggle with the decision due to their business model reliance on software licensing. Not your problem. Others struggle because they are so conservative or do not want to disrupt current partners. Not your problem. Still others don’t make this decision because they do not have the corporate resolve or insight to see where the market is going. Not your problem.
Again, I realize this will have the flavor of a religious conversation, but I believe in there is a valid business proposition in this proposal. I honestly believe you guys can accelerate your current trajectory – opening up the afterburners by opening up your software.
4 comments on “Open Letter to Athena: Open Up the Afterburners!”
I’m not convinced. I did read this quickly, but the gist of your argument appears to be: go for massive distribution/penetration by using Athena tools as a loss leader, in the interest of increasing transaction volumes, with the endgame being the sale of the transaction statistics or “market data”. To me, the parallels to this suggestion for Athena, and what I have witnessed on Wall St over 15 years are obvious, but do not support your business case. On Wall St, decision-support oriented market data is essential. the provider with the best market data becomes an essential resource. It also happens that the best market data providers, are sometimes the best at providing a tool to support transaction execution(eg. Bloomberg). A healthcare transaction, is close enough to a Wall St transaction to to be relevant. So, as you argue your business case for Athena to give away their tools in the interest of collecting market data(an asset with a perceived greater value), the same business case should be appealing to Wall St technology providers. However, the adoption of Wall St tools did not ever follow this path. Users have always paid handsomely for the tools needed to facilitate transactions, and then they pay again for market data. I believe the same model will hold true in healthcare. Users will procure the best tools to meet their transaction processing needs first. If they need market data, they will also procure it. If they can get it from one system great. If not, they will buy multiple systems. The Holy grail of HIT is not a single pervasive system, it is the ability to aggregate accross the top of N number of systems. To solve the challenges of healthcare IT, we do not need to reinvent any wheels. we just need to know where to look(outside of Healthcare IT). Contextual Innovation – it is the context into which a solution is deployed that determines its degree of innovation
I enjoyed your comments and the parallels to the the experience I Wall Street. I agree that it is relevant but not a direct analogy. The tool I am talking about here is the Electronic Health Record which is mandated by a health care specific certification process to have specific features/functions. The certification process drives the tool to quickly become a commodity – vendors cannot compete on the way they display laboratory information – it is mandated. Again, as with most tools (lets use a hammer for example), you soon don’t care what brand, what features and functions, etc you merely care that you have a hammer to use to complete a job. So while the hammer brand loses its value, the value of the hammer did not decrease. At the same time, the value of who is swinging the hammer is once again recognized as the literally driver, force, and power behind what ultimately gets created. The EHR is an amazing information gathering tool – but as demonstrated over the last 15 years of EHR experience, gathering billing-centric data does not really help us improve patient care very effectively. We need to capture clinically centric information; and the more of it we capture, ironically the more effectively we can deliver good medicine and bill effectively at the same time. Since athenahealth’s entire business model is based on a percentage of how much revenue they collect for each practice, it stands to reason that anything they can do to increase the amount of revenue they are collected would be of tremendous benefit to them. So again, I argue (hopefully more compellingly) that they should release the patent on their hammer and get as many hammers into the hands of the people as possible is not only a good business strategy but a good public policy.
Gotta love the Gov.. They will drive up taxes and kill our paychecks. What do you think businesses are going to do when their expense per employee goes up?