Health Care's Electronic Elixir?

In his State of the Union address, President Bush will outline a proposal to improve patient care. His cousin, CEO of outsourcing upstart athenahealth, may be one step ahead of him

When President George W. Bush delivers his State of the Union address on Jan. 31, every American who goes to a doctor will have a stake in the health care proposals he's expected to outline. Remarks are likely to touch on improving health care through technology and changing how consumers pay for their care, in hopes that resulting market pressure will reward high-quality doctors and hospitals and push laggards to improve or disappear.

But one electronic-health entrepreneur will watch the speech with special interest: the President's 36-year-old first cousin, Jonathan S. Bush. That's because he runs athenahealth Inc., a technology outsourcing outfit that will be a huge winner if efforts to improve health-care record keeping through technology take off.


  Watertown (Mass.)-based athenahealth handles billing for small medical practices. It's among the pioneers and chief proponents of technology designed to make sure doctors use the right codes for thousands of different medical procedures and tests, and that they comply with the different methods each insurance company has for making sure doctors get paid. Athenahealth backs up the software with staffers who help doctors find and fix mistakes before they turn into costly delays in payment.

And it helps patients by cutting down on the confusion in bills that most consumers don't understand. "You'll be less likely to be in the middle of a food fight between your doctor and your insurance company," Forrester Research analyst Eric Brown says.

Added reason to pay heed to athenahealth, besides a bloodline to the Oval Office: It's the biggest in its peer group and one of the most swiftly expanding private companies in the country, ranking No. 77 on Inc.'s list of the 500 fastest growing last year. There are rumblings that an initial share sale may be in the offing. The company doesn't disclose profits and losses, but Bush says sales rose to $55 million in 2005, from $39 million in 2004.

His company's bailiwick includes the small medical practices that account for the vast majority of U.S. physicians. It has about 6,000 doctors signed up, a little less than 1% of the U.S. total. Brown says athenahealth takes most of its clients away from local, less-automated small companies that handle outsourced billing for small practices. "I think we'll probably grow another 40% this year, because most of that business is already sold," Jonathan Bush says.


  This Bush is from a younger branch of the family tree than his cousin, and he's not afraid to make critical comments about the President's e-health plans. Last March, Jonathan told BusinessWeek Online that the $125 million the Administration wanted to spend promoting health information technology in 2005 was "a drop in the bottom of the bucket." (See BW, 3/28/05, "Crusader for Clearer E-Info.") The two Bushes' fathers are brothers, and Jonathan is the older brother of TV entertainment reporter and anchorman Billy Bush.

Jonathan Bush says the e-health push the President will talk up in the State of the Union would have happened sooner if not for Sept. 11. He tells of going to the White House in the summer of 2001 for a lunch with a couple of friends on the staff, and being brought to the Oval Office for a drop-by. The President, to Jonathan's surprise, had a spreadsheet in his drawer about the possible benefits of health IT, and told his cousin he thought technology could shave 25% off future health care bills.

"I didn't expect him to be so specific and into it," Jonathan Bush says. But he says his cousin pretended to be hazy on a key detail of athenahealth: "They really let you be the CEO?" Jonathan quotes the President as jibing.


  The returns of automating medical practices can be dramatic. Ted Sullivan, director of physician services at 45-doctor Winchester Physician Associates in Winchester, Mass., said turning billing over to athenahealth boosted the cost of collecting payments by a mere one-quarter of 1% of each doctor's revenue.

By fixing mistakes faster, reducing the percentage of claims rejected by insurance companies, and getting quicker payments by coordinating with each insurer's processes for handling claims, athenahealth boosted Winchester's actual cash collections by 9% in the first year, Sullivan says. At San Antonio Orthopaedic Group, a 25-doctor practice, CEO Usman Mirza says collections went up a stunning 80%. "I had almost 25 people doing collections, and now I have less than 10," Mirza says.

Athenahealth's next move: expanding into software and services to manage medical records, as well as billing. The company is still testing its product to manage the delivery of health care itself, an area where the publicly traded Quality Systems (QSII) is the leader among small doctors, with $57 million in revenue for the six months that ended Nov. 30. As medical records get automated, and electronic records at different hospitals and doctors' offices are connected over the Internet, experts predict a big jump in the quality of care.

Instead of having to manually enter hundreds of lab-test results a day in patients' bulky paper charts, a midsize physician's practice can simply have testing labs upload the results into electronic charts automatically, triggering alerts for which patients need follow-up visits, which ones might need their medication adjusted, and other changes.


  David Brailer, the President's national coordinator for health care IT (see BW, 10/31/05, "This Man Wants To Heal Health Care"), says outsourcing companies such as athenahealth will help small practices stay viable by spreading the cost as technology becomes more important in medicine. "It's a concentrated but decentralized way to do business, and I think it's the future," Brailer says.

Brailer and other e-health acolytes say automation also will help doctors coordinate preventive-care strategies by rapidly flagging changes in a patient's condition. Big corporations like McDonald's (MCD) that have used technology to track the progress of chronic-disease sufferers such as diabetics have seen double-digit declines in the cost of their care during pilot programs. But adoption of information technology is so low that it's difficult to quantify the likely improvement across the whole economy, or how fast it might happen.

Still, the rising interest in e-health is putting Jonathan Bush in line for a nice payday. He's coy about rumblings of a 2007 initial public offering, saying he has to get the medical-records tracking service fully launched and make athenahealth's growth path more predictable before he's ready to try: "Well, no wine before its time," he says. But clearly, the table is being set.

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