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Takeaway: We witnessed a hospital running the majority of their clinical operations and the entirety of their business office on athenahealth

ATHN | INPATIENT IS REAL AND READY TO GO 2017 - Welcome to watertown cartoon

overview

We spent last Friday 60 miles outside Fort Worth, Texas visiting a 17-bed rural hospital that has athenahealth's inpatient system up and running, and is both a development partner and showcase client. This hospital was a RazorInsights customer prior to athenahealth's acquisition in early 2015, and has been on four different EHRs in the last five years. The purpose of the visit was to see first-hand how the system is being used on a daily basis and to determine its readiness to go mainstream in 2017.  What we witnessed was a hospital running the majority of their clinical operations and the entirety of their business office on athenahealth's solution.  The hospital staff was extremely pleased with the usability of the system, as well as the level of service from athenahealth on both the clinical and financial side. Overall, there were no major holes in the system not already being addressed that would limit athenahealth's ability to bring the > 80 hospitals in the backlog live in 2017. 

The production quality of the tour was top-notch, with access to the CEO, CFO, Business Office Manager and Nursing Director.  We were allowed behind-the-scenes into the business office to see how they run reports, work through claims and manage the P&L of the hospital.  With a new $30 million hospital to show off, inpatient suites rivaling that of urban peers and no shortage of technological accoutrements, we could not imagine a better showcase client for athenahealth. 

clinical development near finish line; lab jan 2017

The only clinical modules still in development were lab and radiology, with surgery currently being implemented and tested.  athenahealth has partnered with Merge for lab, which is scheduled to go-live January 2017 and will be integrated on the back-end with the rest of the clinical system.  Based on our conversation with other rural hospitals, we believe the partnership with Merge is a temporary solution until athenahealth has their own lab system developed late 2017 / early 2018.  Lab has been described to us by Healthcare IT Consultants as generating the least synergy from being on the same platform as the EHR, and because Merge is a robust stand-alone solution that is generally too expensive for small hospitals, we view this partnership as a net positive. 

athenahealth has the core clinical modules in place to effectively serve less complex < 50 bed facilities where inpatient revenue generally represents < 30% of hospital revenue.  The ability to scale into larger hospitals will largely be dictated by the complexity of each hospital, but from what we saw, athenahealth already has a solid and marketable foundation to build from.  We also expect the intellectual property assets acquired from BIDMC's webOMR will accelerate this process.

solid financial package; intact solves achilles heel

On the financial side, the general ledger and patient accounting system is provided by Intact, which required a separate log-in and had different look and feel than the rest of athenahealth. However, Intact is integrated on the back-end with nightly data uploads that are done automatically from athenahealth.  We don't believe the lack of front-end integration is a problem, because the only user of this system is the CFO.  All other financial modules to manage the claims process and quality reports are accessed through athenahealth. The Achilles Heel of the RazorInsights system was that it had a poor financial package and the relationship with Intact solves this problem.

While headcount in the billing office has remained constant since going live on athenahealth at the beginning of 2016, they have experienced a productivity increase of 2 FTEs who they have assigned to work on other tasks.  The CFO and Business Office Manager frequently emphasized the value of having access to athenahealth's expertise given that access to talent is a big problem for rural hospitals. Finally, the hospitals days in A/R have declined to low 40s from over 100 earlier in the year after going live on the new system, although it wasn't clear how much of the improvement was directly related to athenahealth.

BACKGROUND AND MOVE TO RAZORINSIGHTS

  • Hospital has been on four different EHR and financial systems in the last five years with two law suits.  Each vendor had their own clinical and financial offering, and was competing for the business of the other, which made working with them difficult.
  • CEO joined 6-years ago and the hospital had just signed a contract with an EHR vendor to work through HITECH registration.  Cost of the system was $1 million and focus was attesting for Meaningful Use.
  • Hospital hadn't sent out a bill in over 90 days mostly due to the systems weak financial package. Ultimately they switched to the financial package of the EHR vendor, which ended up not being much better.
  • Hospital's EHR vendor ended up "out kicking" their coverage due to high demand from Meaningful Use and support suffered greatly as a result.  Hospital's financial performance deteriorated further and could not get claims out due to problems with the system.
  • CEO made the decision to leave this vendor because they were not 2014 certified and would not be ready in time for attestation deadline.  Started the search for a new vendor that could get them to attest for Meaningful Use on a shortened timeline.
  • Considered MEDITECH, CPSI and Cerner, but was approached by RazorInsights and they were the only vendor that was contractually obligated to make sure the hospital would attest and hospital was successful.
  • Cerner was too expensive and the system was overly complex, which would result in a dependence on Cerner that the hospital didn't want to have.  Cerner sent out a physician to the demo, but the hospital employees were not impressed.
  • MEDITECH, CPSI and Cerner could not get them live in time to attest.  Lowest price was CPSI at $1.1 million with a 10-month implementation and Cerner was the most expensive at $2.4 million with a 12-month implementation.
  • RazorInsights cost was $150k in implementation over 4-months and then ongoing support of 12k per month with a 5-year term, and would get them live in 3-months.  It was user-friendly and basic, and the hospital already had employees who were "gun shy".
  • Transition from old vendor was a disaster, with the vendor holding the hospital's data hostage and demanding a $15k per week access fee even though the data was held on the hospital's own servers.
  • Meaningful Use deadline was fast approaching and the number of certified vendors had declined substantially since 2010.  RazorInsights was a "god-send" because no one else could get the hospital live in time to meet the deadline.
  • Signed contract with Razor in April 2014 and was live by June 2014.  RazorInsights had three people onsite for ten days, and because it is a cloud-based system they were able to do real time system adjustments and training.
  • Big problem with the RazorInsights system was in the financial package itself.  RazorInsights was open from the get-go saying that their financial package was not ready yet.  There were problems being able to reconcile accounts, generate reports and get a detailed general ledger.
  • Generally satisfied with RazorInsights on the clinical side and the problems they had were not the vendors fault.  For example, connectivity was an issue as the old hospital was using a satellite service for the main connection.

move from razornisghts to athenahealth

  • News of athenahealth's acquisition of RazorInsights gave the CEO a lot of confidence where they could "finally see the light at the end of the tunnel".  CEO had previously been aware of athenahealth, and knew they had a lot of capital to put behind the system and that it was cloud-based and had a strong outpatient offering. 
  • CEO realized that part of the reason for athenahealth's entrance into the inpatient space was due to them losing share in ambulatory to Epic and hospital acquisition of providers.
  • Important for CEO that athenahealth had skin in the game based on their percentage of collections model.
  • athenahealth moved quickly after the acquisition, and they communicated to existing customers that the plan was to move everything over to athenahealth's cloud.  CEO was willing to do alpha-beta testing with athenahealth through the process.
  • Clinic went live on athenahealth mid-2015 and made the switch to athenahealth's inpatient solution at the beginning of 2016.  athenahealth had 10 people on-site for the conversion and they were very focused on their success and learning.
  • CEO said "athena exceeded our expectations" during the transition process, emphasizing the level of service that athenahealth provided. "This is bigger than being able to bill for services" as the hospital was finishing up a $30 million project and needed access to information to provide to bankers.
  • Hospital experienced a modest negative impact in cash collection during the transition, but nothing outside of normal for an EHR implementation.  athenahealth had people at the hospital every week and the hospital staffed joked that "they should just be employees".
  • CEO signed up to be a "guinea pig" for building the product, and the staff during the demonstration said there were frequent updates beyond the two a month communicated by athenahealth.  However, these updates were not disruptive to their workflow.
  • Hospital staff would work with athenahealth programmers and athenahealth was quick to fix workflow issues and make changes to the system to make it more efficient.
  • RazorInsights financial packaged continued to be a problem, which is why they partnered with Intact for the patient accounting and general ledger side.  Hospital CFO is very pleased with Intact, the ability to run custom reports and drill down into claim level detail from financial statements. CFO was also pleased the level of service from athenahealth, noting that if she does have a problem with Intact she still calls athenahealth.
  • Hospitals days in A/R before moving to athenahealth were approximately 112 and billing process was managed by 8-10 people.  With everything live on athenahealth now the days in A/R have declined to approximately 42.  The hospital still has 8-10 people in the business office, but has seen a productivity increase of about 2 FTEs. 
  • Hospital is also experiencing rapid growth in outpatient services and is adding people in billing as a result.
  • Physicians like having one patient, one record across both care settings.  Easy to pull up outpatient record on the inpatient side and vice-versa.  Providers like the Medication Administration Record (MAR).
  • We witnessed a lot of clicking and box checking during the inpatient clinical demonstration. However, we were told that it is normal with any system, and they emphasized that athenahealth's system was much faster and easier to work with.  They showed us a snapshot of the old RazorInsights system and the interface seemed antiquated relative to athenahealth's and the response time was lagged with the "spinning wheel of death".
  • athenahealth has been moving over to the "streamlined" version of their EHR through 2016, with many of the design changes being the result of needing to have the workflows on the outpatient side work with the new inpatient EHR.  We asked if any of the providers complained about Streamlined and the response we got was, "they like Streamlined better."
  • CEO told athenahealth to not sell what they cannot implement effectively, or where the level of service will deteriorate.  
  • It has been the hospital's experience that if they have questions, they pick up the phone and get answers quickly.  CFO explained that rural hospitals have trouble finding the right talent, and that having access to the large team at athenahealth has been incredibly valuable.
  • Business Office Manager explained that athenahealth is watching their performance on the back-end, and there have been instances where they have flagged inconsistencies that could have resulted in a big collections problem well in advance.
  • CEO emphasized that new hospitals signing up for athenahealth over the last 6-9 months and today won't have to deal with the issues and frequency of updates that they had to endure during the development process.
  • Main issue staff has with the system is that they still have to do some work out of the RazorInsights platform.  However, that is scheduled to change at the beginning of 2017.
  • Both the clinical and financial system allowed users to create custom reports and templates based on user preference.

critical access hospital problems

  • CEO has heard of some hospitals having hard time with the transition over to athenahealth. Most of them are critical access hospitals (CAH) and the problems have been related to reporting requirements specific to CAH such as 340b programs, Medicare cost reports and data submission to state registries. 
  • One of the hospitals having problems called the CEO to express their frustration, which was completely counter to the reference sites experience.  The CEO invited the troubled hospital to come down and see what they were doing.
  • CEO was a "quiet mediator" and contacted athenahealth who said they were aware of the problem and working with them.  CAH get reimbursed through their cost report, which has to be filed monthly and there was an issue with how athenahealth's services were being expensed. The problem ended up not being due to athenahealth, but the accounting department and athenahealth still made them whole anyway.
  • We would note that Weems Memorial Hospital, a CAH in Florida experienced similar problems and were documented in the board meeting minutes (Click Here for Field Notes)
  • Hospital having problems spent almost 2 days onsite meeting with different departments at the reference site and seeing what they were doing differently.  At the end of the onsite visit, the CEO of the troubled hospital realized that they were at fault for much of the dysfunction, that personnel attitudes were not in the right place and there were some individuals actually looking to see the new system fail in a referendum to change.
  • Two months after the onsite, many of the problems at the hospital were resolved after some personnel changes and attitude adjustments, and relationship with athenahealth improved.

Please let us know if you have any questions.

Thomas Tobin
Managing Director


@HedgeyeHC

Andrew Freedman, CFA
Associate


@HedgeyeHIT 

Alexander Ross
Analyst