The Amazon.com and Facebook of Health Care

An investment in athenahealth is an investment in CEO Jonathan Bush's vision for an interconnected health care internet.

Feb 18, 2014 at 12:15PM

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
There’s a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it’s one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Seth Robey owns shares of Amazon.com. The Motley Fool recommends Amazon.com, Athenahealth, and Facebook. The Motley Fool owns shares of Amazon.com and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers