By SCOTT SHREEVE

Afterburner (af·tər′bər·nər) n.

1. A device for augmenting the thrust of a jet engine by burning additional fuel in the uncombined oxygen in the gases from the turbine
2. The augmentation of thrust obtained by afterburning may be well over 40% of the normal thrust and at can exceed 100% of normal thrust

Athenahealth is one of my favorite companies anywhere. I believe they have a great vision, a  highly capable team, an incredible business model, and an unprecedented business opportunity before them. However, for all the amor, I have been disappointed that even with all their blistering success (Bam, Bam, and Kabam!) they have captured less than 2% of the target market since the IPO. I am not just disappointed for them but for the entire ambulatory care space which doesn’t seem to readily get the value of the collective intelligence inherent in the network.

In November 2007, I attended a technology conference with Jonathon Bush in the LA area. Jonathon was in rare form that day (probably trying to get psyched for his WFC battle with Allscripts CEO Glen  Tullman which never materialized – Glenn was a no show) and I challenged him to get serious about getting his software in the hands of as many physicians as possible. We had an animated 45 minute banter on how this could actually happen. He asked me to write up the proposal I drafted on the back of a napkins that were doubling as our ad hoc whiteboard.  I think he briefly considered it, but the business focus and the upcoming IPO made it just a passing interest. Now, nearly two years later, I still think what I wrote is highly relevant and could be highly very useful in helping athenahealth rapidly expand their current book of business.

My pitch to athenahealth, then as now, is to turn on the AFTERBURNERS by opening up the platform:

November 6, 2007

Provocative Quotes

• “Software is Dead”
• “The Network is Nirvana”
• “Features/Functions” vs. “Collective Intelligence”
• “Revolutionary Model” and “Army of Messengers”

Business Case

AthenaHealth is the hottest health care information technology on the planet as I write this. The recent oversubscribed IPO has been sequentially followed by exceptional national press coverage, impressive recent customer wins, and an ongoing run up in the stock price.

This unprecedented public launch is another confirmation of Athena’s compelling business model. Athena provides back office automation software that leverages a proprietary claims database and workflow engine that dramatically reduces the inefficiencies of medical practice finances. As a result of this technology, Athena has been able to provide medical practices with real-time information on claims, cash flow, and financial optimization. By focusing on the revenue cycle management service, Athena knows first hand how relevant clinical information is the creation and management of financial information. In order to more effectively capture that information, Athena recently launched AthenaClinicals, their web based EMR which complements their web-based AthenaCollector software.

Because Athena’s business model is based on revenue cycle management, and the clinical software is a means to acquire better financial data, Athena does not have to charge money for the software itself and choose to sell it as a service. In fact, since the revenue model at AthenaHealth makes money off the increased collections, Athena is willing to go at risk on implementations.

This represents one of the new school business models and an evolution of the Software Value Chain evolution. Furthermore, due to its architecture of participation, each new practice becomes a contributing member of the Athena Network. This Network effectively creates a natural “collective intelligence” and collective experience around best practices, insurance rules, and financial optimization. 

Because Athena was conceived as a “Software as a Service” company and because the revenue model does not involve software licenses, the value of AthenaClinicals does not reside in the features/functions, but in its ability to gather bits and bytes. The greater the ability to gather bits and bytes, the greater the ability or opportunity to generate revenue streams. It therefore stands to reason that the more broadly your bits and bytes gathering ability is distributed, the more opportunity you will have to generate revenue. Why not have as many doctors as possible using AthenaClinicals by making if freely available for their use?

This decision would allow you to reap the whirlwind of innovation, while still protecting all your proprietary knowledge and intellectual property within Athena Collector and Athena Enterprise applications. Access to the Network would continue to be on a subscription basis but you would open up development and collaboration opportunities which you have not previously contemplated. The Athenista’s will be celebrated as hero’s, an appreciative community would form and become a veritable “army of messengers”, and I believe you would continue to force disruptive change within the industry. Based on your successful business and your successful brand, I believe that you could accelerate the creation of a public good that you have previously discussed by engaging a worldwide public of developers, users, and potential customers.

Specific and tangible additional benefits would include:

• Get the benefit of solidify your message that “Software is Dead” and the “Network is Nirvana”
• Get the benefit of a huge branding and buzz opportunity
• Get the benefit of expanding the number of potential developers of the software
• Get the benefit of expanding the number of potential users of the software (decrease adoption impedance)
• Get the benefit of having a larger installed user base to upsell your professional version and access to AthenaNetwork
• Get the benefit of collaboration from partners, players, and payers that you have currently not contemplated
• Get the benefit of co-announcing and co-branding with Red Hat and/or Ubuntu to leverage up on the ongoing buzz associated with Linux
  
• Get the benefit of creating a community, neigh an entire nation of Athenista’s, who plug into the network effect which you have amplified.

I have struggled to find a compelling reason not to do it. Most companies struggle with the decision due to their business model reliance on software licensing. Not your problem. Others struggle because they are so conservative or do not want to disrupt current partners. Not your problem. Still others don’t make this decision because they do not have the corporate resolve or insight to see where the market is going. Not your problem.

Again, I realize this will have the flavor of a religious conversation, but I believe in there is a valid business proposition in this proposal. I honestly believe you guys can accelerate your current trajectory – opening up the afterburners by opening up your software.

Scott Shreeve is a physician and entrepreneur based in Laguna Beach, California. After a long career in medicine, Scott founded the open source electronic medical record company MedSphere. He currently serves as entrepreneur in residence at Lemhi Ventures.  Scott is a frequent contributor to both THCB and the Health 2.0 Blog. He blogs regularly at CrossOver Health, where this post first appeared.