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Critical Innovation In Healthcare Claims Processing: athenahealth CEO Jonathan Bush (Part 7)

Posted on Tuesday, Mar 24th 2009

SM: How will all of the political drama affect visibility of healthcare IT? Will it just result in the government’s funneling money into things that do not have an impact?

JB: We have been hard at work bringing about the death of the old-fashioned software companies that dominate healthcare IT. Their business models and companies should be dead. They have been doing a great job of falling apart. Now, thanks to the federal government, they will be given another five years to live, which will slow us down and prevent the evolution of software-enabled service business models. Eventually they are going to die because at a fundamental level they do the wrong thing.

SM: You think healthcare IT policies are going to give a lifeline to the incumbent IT systems?

JB: Absolutely. It is possible that if we get the right secretary of Health and Human Services (HHS), a window of hope will open. [The acting secretary is Charles E. Johnson, who was appointed by President Bush.] The phrase that gives hope is ‘meaningful use’. The secretary is allowed to pay out this high-tech money only to doctors that she concludes are demonstrating meaningful use. If the secretary defines meaningful use as reporting clinical data on every patient seen, then the old-school software companies are in trouble because they cannot do that. They cannot log into all of their customers’ databases and report the results to the government.

If the secretary requires reporting against the Physician Quality Reporting Initiative (PQRI), which is already established for this purpose, then maybe this money will only go into companies that can deliver a new business model. Otherwise we are just going to keep the problems alive longer than they need to be.

SM: Depressing.

JB: I think that no matter how you design a plan like this you are going to get a sea of unintended consequences. I think of the Stark laws, which were intended to prevent kickbacks in Medicare. They were well intentioned, but they created more costs than the actual kickbacks. He was trying to save money and ended up creating more money.

In general, if the private sector does not get off its duff and do something well on its own, the government is going to come in and ‘help’. That is going to hurt. This is a long-term lesson about how important it is for marketplaces to disrupt themselves. It is more important to get into new business models rather than squeezing the last ounces out of old ones.

Overall it is not going to hurt us. It has brought a lot of attention, energy, debate and focus. That may allow the best model to win anyways. We have seen nothing but an improvement in sales and our visibility.

SM: You are basically saying you need to keep doing what you are doing and the classic entrepreneurial, capitalistic market approach of offering a good products, good value and good service will solve the problem in a pure capitalistic format.

JB: That is right. The only thing that has hurt us so far is that we had to spend a year building out a bunch of features that nobody should use to make our software federally certified. We are now federally certified, which is literally like George Orwell alive in living color. The reality is that almost half of what you need to show you can do are things that if doctors used, the EMR would cost them money rather than make them money.

We are also Health Insurance Portability and Accountability Act (HIPAA) certified, which cost us a lot of money. We are Sarbanes-Oxley certified, which cost us a lot of money. We are SAS 70 compliant, which cost us a lot of money. We operate in a society which is regulated, and that is OK. I don’t test the water at home; I just drink it. We benefit from regulation in many ways. It is like paying your taxes. Not all of your taxes go where you would like them to go, but it is kind of nice to have a defense.

SM: Anything else I should have asked you or that you would like to discuss?

JB: No. I was a little gloomy with that. The fun thing with being a single national network with everyone on one application is that if the government does change these rules we can be the quickest to the bar. The ability to comply with ever-changing government regulations actually speaks to our competitive advantage, which is an ironic twist and is something we are enjoying.

SM: You have a large TAM, the right solution, and it is basically just a matter of building in a pure capitalistic way. I like that a lot.

JB: That is certainly what we hope ends up being the ultimate story.

SM: That is why I am pushing for Obama to surround himself with people like you who are domain experts in the areas he is trying to take on, such as healthcare, education, and clean tech. I would definitely prefer that than him surrounding himself with people who are removed from all of that. Most people in government have never been entrepreneurs.

JB: No kidding. No question there.

SM: I look forward to following your story. Good luck, and it is wonderful to see you succeeding.

This segment is part 7 in the series : Critical Innovation In Healthcare Claims Processing: athenahealth CEO Jonathan Bush
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