While thumbing through the transcript of health care IT provider athenahealth's (NASDAQ: ATHN ) most recent quarterly conference call there was one quote from colorful CEO Jonathan Bush that I found particularly forward thinking:
"The goal here is to get into the front door and the back door of the hospital and then work our way through the wards and departments"
In one sentence, Bush summed up the whole goal of his company. But what's interesting is that without the context of a hospital this proclamation could be a working mission statement for any number of businesses. The parallels between this vision for athenahealth and the models of Amazon.com (NASDAQ: AMZN ) and Facebook (NASDAQ: FB ) are stunning.
Being more things to more people
No one really wants to go to the store when you can order pretty much anything from the couch. That's been the driving force for Amazon's sustained 22% revenue growth in 2013. Likewise, athenahealth has built a business out of simplifying nitty gritty menial work, in this case the work of managing a medical practice. The result is similarly explosive sales growth. Athena saw its revenue grow by 41% in 2013 as doctors invest in streamlining the medical workflow and eliminating mountains of paperwork and bureaucracy.
Part of eliminating the busy work means becoming more things to more people, and the company continues to invest in projects that create an ecosystem of medical care solutions. For example, the acquisition of mobile drug reference Epocrates allows athenahealth to enter the mobile market and grow its name recognition through Epocrates' millions of users. Epocrates, Bush hopes, will serve as an 'on ramp' to engage users in athena's other offerings. In accordance with that forward thinking model, Bush explained that for every 1 point of gross margin growth, management will reinvest 0.5 points in research and development.
That growth parallels the growth of Amazon.com and Facebook. Amazon invests heavily in growth, causing its revenue to expand at a far greater pace than its earnings. Those investments are helping Amazon reach into your refrigerator with Amazon Fresh, and into your living room with Amazon Studios. Facebook is penetrating deeper into its target markets with the acquisition of Instagram and a crucial transition to a mobile platform.
Overcoming the inertia of a stagnant industry
The differentiating property of athenahealth's suite of IT services from the rest of the electronic medical records industry is its use of the cloud. By putting electronic health records, insurance reimbursements, practice management tools, and patient outreach on the Internet, athena is enabling a fully interconnected workflow of patient care. But the adoption of these tools by the stubborn health care community has faced fears about the security of cloud-based systems. In fact Bush recently pointed out in an article in Scientific American that even in the age of the Internet an average physician still processes over 1,100 faxes per month.
Those are the same fears that Amazon.com CEO Jeff Bezos was forced to placate while making e-commerce a viable sales platform. As Bush points out, Bezos helped to construct the "retail Internet" by instilling confidence in the security of credit card information, and in the "fidelity around click to reality" commerce. For athenahealth, it's all about the "health care Internet," and Bush sees the market slowly adopting cloud-based health IT solutions as it adopted e-commerce.
Using the information backlog
By virtue of working digitally, Amazon and Facebook are able to capitalize on the data they collect from their customers. Amazon recently announced anticipatory shipping -- sending products to local distribution centers before customers even place the order. Facebook's entire ad sales model relies on directing user-relevant advertising determined from a user's profile information.
Unlike the health care IT services of traditional providers like Epic Systems, athenahealth's cloud brings every bit of clinical and organizational data from its customers through its servers. Like Amazon and Facebook, athenahealth has plans to use its data for new business ventures. For example, Bush envisions a new model of health insurance where plan underwriting is more responsive to the patient, and where insurance reimbursement is timely and painless. "All of this is instantaneous intelligence built into the wire," he says. "That should be us."
The Foolish bottom line
For many people, an investment in Amazon.com or Facebook is in investment in Jeff Bezos or Mark Zuckerberg. I think that an investment in athenahealth is an investment in Jonathan Bush's vision of an integrated health care IT solution. As he puts it, "there will be a health care Internet, and we will be the ones who have created it."
Even with athenahealth's impressive growth, it may have trouble keeping up with this stock in 2014
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