Ann Fishman and Dr. Eric Fishman with EHRtv at MGMA in New Orleans 2010 speaking with Jonathan Bush, Co-Founder, CEO and President of ahenahealth
Ann Fishman: This is Ann Fishman and Dr. Eric Fishman with EHRtv at MGMA in New Orleans 2010. We are very honored and excited to have Jonathan Bush, Co-Founder, CEO and President of ahenahealth. Thank you for joining us.
Jonathan Bush: Well, thank you, Fishman's.
Ann Fishman: We are very impressed with your new billboard out there with the beast.
Jonathan Bush: The beast, yes.
Ann Fishman: So the very important question: what is the beast?
Jonathan Bush: The beast. The beast is the metaphor for all that is ajada about being in medicine, all of the crap work that has nothing to do with the patient experience and that kind of layers in between like wall mold kind of rotting out the experience of bringing health to people in need. So it's claims bureaucracy, it's CCHIT, it's Meaningful Use, it's hospital rules, it's admitting privileges, it's authorizations and them running out and getting new ones, and eligibility checks and credit card numbers, it's all of the...
Dr. Eric Fishman: You can say it.
Jonathan Bush: ... swag that's in the way. You know, one way to get out of the way of that these days people are choosing is: sell your whole practice to the hospital which, you know, it's a solution. It does seem a little bit like a pretty large scale move to get rid of that crap and my theory is that the cloud actually is the better way. And then if you want to sell your practice while standing on your toes, great but don't do it standing on your heels. Similarly, you see a lot of hospitals acquiring practices on their heels and of course we all saw that in 1990 through 1996 where they all had this great marriage together and then they all got divorced, right? Now this time, they're like oh, you know I've been thinking a lot about you as the government's changing the rules and as hospitals are increasingly paranoid about where the referrals are going to go and so it's, oh, I've been thinking about you too, you know. And they're like, well, let's have wine, you know and pretty soon they're getting back in the sack. Only this time they're having kids to the tune of $70,000 of capital expenditure per doc on EHR stuff, right? So now when the divorce happens, who gets the kids? It's going to be a mess.
Ann Fishman: Would you consider the regulatory environment a part of the beast? Is that more solution or problem?
Jonathan Bush: Absolutely, absolutely. You know, the beast is part of nature and nature has beasts. So I don't think the idea is that there should be a beast free world. You see, of course there has to be regulation. The biggest buyer in healthcare is the government. It's not going to go away, right? Some years it will go up and some years it will go down but in general, what we want to do is create an eco-system that peels that stuff away, that gives physicians and practices of all sizes confidence that they're swimming in the right swim lane and that they're moving as fast as they can. And they're really only constrained by the limits of their practice, their empathy, their time with patients. So that's the idea. The beast isn't something that we kill.
Ann Fishman: It's something we tame.
Jonathan Bush: We tame.
Ann Fishman: With beauty and finesse.
Jonathan Bush: Exactly.
Ann Fishman: Absolutely.
Jonathan Bush: And the beast comes. Come on, you know.
Dr. Eric Fishman: The beast has an eye that winks I've noticed on occasion.
Jonathan Bush: Did you notice that? You must be a doctor. It's a special hologram. It winks whenever doctors go by the booth. I made that up, it's not true. There are a lot of false claims at this trade show. That was another false claim. I hope it's the only false claim I make during this interview.
Dr. Eric Fishman: Does athenahealth take care of all of the issues? A few years ago, athenahealth was a revenue cycle management specialist.
Jonathan Bush: Good point, right.
Dr. Eric Fishman: And now obviously it's grown and does more than that.
Jonathan Bush: Right.
Dr. Eric Fishman: Maybe you could go from soup to nuts and tell us what each of those is.
Jonathan Bush: Right. I think the way cloud based services should evolve, do evolve, is you start with one thing and you crush it and then you take those assets, those capabilities you used to solve one business problem and you say hey, what else could I solve with this? And little by little you kind of morph into more and more services. So like you said, we started with revenue cycle management at athena and before you know it we say, gee the ability to post these things, to read these scan remittances is actually the same ability you need to read all these millions of faxes that doctors get into their office with clinical results and refill requests and thank you letters from primary care doctors. So we built out athena Clinicals to take advantage of our ability to read millions of paper documents electronically and to automate those paper documents over time by building interfaces which is exactly what we did in Collector. So what's Clinicals? It's a super-highway, not into insurance companies, but into labs and pharmacies and hospitals and specialty practices. Same competencies. So the second big service was athenaClinicals and the third was athenaCommunicator. Same thing. Now instead of a million EOBs coming in for Collector or a million faxes coming in for Clinicals, you've got a million phone calls coming in. Another bane of physician practice existence is these millions of, "I have one question", "I can't make it that day" or they don't show up or the bill goes to the wrong person or the bill goes around and around. All of that requires outreach one-to-one between patients and the practice.
Dr. Eric Fishman: And have you solved that?
Jonathan Bush: Solved it. Unbelievable. Unbelievably how well these things responded. So athenaCommunicator, instead of sell people a portal which may or may not work depending on whether you happen to have patients with six Blackberries on their belt, we sold a communications service and said hey, we'll make money if we can get these patients to use the portal but if they want to talk to a person that'll be on us. And so we have phone, SMS text, e-mail and the portal for each practice we serve. It doesn't matter which way the patient goes. It's our expense and so we're streaming, sort of organizing, taming this kind of unseemly set of ganglion that represent how patients try to reach into the practice.
Dr. Eric Fishman: I walk around the hall here at MGMA and I find -
Jonathan Bush: Ganglia. Plural. Sorry.
Dr. Eric Fishman: - extraordinarily underwhelming utilization of portals from the perspective of the patients.
Jonathan Bush: Yes.
Dr. Eric Fishman: The patients don't do it.
Jonathan Bush: Right.
Dr. Eric Fishman: And yet, you go to the airport and the kiosks are full.
Jonathan Bush: Absolutely.
Dr. Eric Fishman: Why?
Jonathan Bush: Perfect. So the airline is selling you a seat on their plane. The portal company is selling you their portal. The airline really cares whether you use the portal. The portal company doesn't give a ---- right? Once they sold you the portal, God speed John Glenn. You know, once somebody's bought $150 million copy of Epic, Epic's work is largely done. I mean, they've got the money. Yes, they're good people and they're a great company and so they go and stand by their products but that's largely super ego at that point, cause they did get the money. So over time when Evil Bill and Evil Ted take over from Judy and what's his name, which will never happen but if it every did, you can imagine it'll look a lot like these big publicly traded hospital software companies.
Dr. Eric Fishman: Do your physician's patients use the Internet to connect to the physicians?
Jonathan Bush: The Communicator patients do but when they don't, they're still connecting to athena. So we know the volume of patients that are going through that portal every day and what they're using and when they're not. And when they don't, we know what they're using instead. We know whether they're pressing two on an automated reminder call and talking to one of our agents. We know whether they're actually filling out that bloody piece of paper - which is never - but we know that. athenahealth is a cloud based service; we sell results. You know, Amazon has great software, athena has great software. Amazon sells stories. We sell paid claims, settled appointments, filed charts, right? Amazon's store that you walk into to do it is the application. Our store is athenaNet. So that's the difference. It’s a very different incentive alignment.
Ann Fishman: The HITECH Act states as a goal that all Americans would have an electronic health record by 2014. Now we're almost at 2011. How realistic is that?
Jonathan Bush: You know what? I have to say we're a lot closer than I ever dreamed we would be because I didn't quite feature the extent of hospitals acquiring practices. That really is throwing me for a loop the extent of it because if you look at the micro economics of each one of the deals, they don't quite pencil out. On average we're seeing hospitals, particularly the ones that are in multi hospital towns, are paying between one and 200,000 - 100,000 for primary care and 200 for cardiology - in annual subsidy per doc. Well, even if the primary care guy sends a million dollars worth of admissions every year and the hospital has a top ten profit margin of three percent, that's 30,000 bucks. And they're getting a $100,000 subsidy. This isn't penciling. So 2014 is about the year of healthcare's sub-prime mortgage crisis to me. It's the year that everybody's on something so the box is checked. But then the weight of the financial overages and the sort of untenable deals that were done to get there, are just tipping the scales to where they can't be sustained anymore. I don't exactly know what happens in 2014. I think a fair amount of bankruptcies of hospitals of the weaker. Not the guys with the great university endowments to feed a hospital's losses, but not everybody's got that. And where those guys go will really tell the next chapter of healthcare. Does the government step in and do a GM and not only own the biggest payer but become the biggest provider? Do the for-profits snap them up in time and restabilize them in a way that doesn't scare the community and scare the not-for-profits? Do the not-for-profits expand? Do the doctors take them over? I mean, a whole other idea is that private equity steps in with ambulatory ideas. You know, 20 years ago private equity, venture capital, the markets tried to step into the disorganized world of medical practice.
Dr. Eric Fishman: Didn't work.
Jonathan Bush: Didn't work. They didn't have enabling technology, they couldn’t handle getting their claims paid and their charts filed at scale and they couldn't take on the independent doctors in their neighborhood. They were too protective and if working for the PPM didn't work, they went across the street and competed. Well, what's happening now is all of those very same competitors are being sucked up into the hospital. Now you've got to follow the yellow line to the blue line to the Greenberg building to see that same doctor and the strip malls are wide open for hungry, customer focused, retail oriented, private equity backed providers of healthcare to step in. The other thing that's different: claims is different, primary care competitors is different, medical records on the Internet is different and the availability of non physician provider capacity is different.
Dr. Eric Fishman: I used to be a doctor, then I became a provider and I started quitting when I became a "vendor of healthcare services". That was it for me. I didn't want to be a "vendor of healthcare services".
Jonathan Bush: I don't like being a vendor either. I don't know why but that word bothers me. "Oh, you're here for a vendor meeting?" No, I'm here for a business meeting. I'm going to help this health system. You call me a vendor? I don't sell Snickers.
Ann Fishman: How significant is cyber security in the scheme of things?
Jonathan Bush: Security?
Ann Fishman: Cyber security.
Dr. Eric Fishman: You said 2014 is going to be a sea change and some people here think that 2014 is security (inaudible).
Jonathan Bush: A lot of these systems are being bought on credit. Hospitals are floating big bonds and borrowing money at really good rates over a 10 year period. So you figure you amortize it but in about year five of your 10, 15 year amortization, your software's done but you've got 10 years left in the bond.
Dr. Eric Fishman: You're interested in securities and we'll get to that in a minute but I think Ann is talking about data security.
Jonathan Bush: Data security?
Ann Fishman: Well, yes from an infrastructure standpoint because even this administration has a plan for cyber attacks. So where does that put the protected health information that is now in the middle of this?
Jonathan Bush: That's a really good point. I think as people move the proximity, make data more accessible, more searchable, they have an obligation to make it more secure by more than that. In other words, if you make something 10 percent more accessible, more integrated, you need to make it 100 percent more secure. So it's a disproportionate trade-off that you have to make.
Ann Fishman: Is this technologically possible?
Jonathan Bush: Sure, yes. When you start at the baseline where the average practice has no security whatsoever - you walk by charts, they're everywhere - absolutely you can do levels of security that are profoundly greater than what people are used to. Even in hospital systems you've got a bazillion employees all over the place, all with different access to the systems and you had to be in four or five different systems in order to get all the information you need. And frankly the kind of technology management you can afford as a hospital and attract and keep when you're only just buying and managing off-the-shelf products, it's not that great. So I mean it's fine, it's nothing wrong with it but you're not going to be at the level of a company like an athena. We actually attract and retain the very best engineers in the world cause we're giving them world changing projects to do every year that we disseminate not just to all of our employees but to all of our customers. So it's just a different level of intensity you can bring to it. We know instantly out of the 180,000 people with production access to athena across the country if somebody logs in from two places at the same time. We know about it right then and they both get shut down.
Ann Fishman: What do you think of the market of personal health records? Do you think that it gives true autonomy to the patients or just an illusion of control?
Jonathan Bush: Well, you know, I could pooh-pooh that like I pooh-poohed the whole Obama EMR thing because they're getting onto old fashioned software based EMRs and similarly, you're getting onto these static PHRs, but I do think that if I'm honest with myself, something is better than nothing. Getting people moving, it's a sort of an ancient John Maynard Keynes. I don't care if I'm paying people to dig a hole in the ground and paying more people to put the dirt back in, at least they're going to go home and buy bread and have a housekeeper or whatever it is. So I think that bad PHRs are better than no PHR's. The real breaking point for PHRs would have been this year but then when Obama was elected everybody sort of thought hey, we're all going to get a freebie here. We were almost at the three and a half percent market share tipping point for consumer directed healthcare where the first couple of thousand dollars was the responsibility of the end patient, right? That was when the PHR was going to really kick in. When that patient was suddenly in charge, they're like, "You did how many CBCs on me? What!" Right? "I want it in my Google box, I want it in my HealthVault, I want it in my MDeverywhere" or whatever.
People will be furious when the $2,000 deductible goes to what it's actually going to. And it won't be the great hip replacements that get fixed, it'll be the little things. It'll be the bills and the appointments and the lost blood results and all those things. So they'll demand it as the payer, as the first dollar payer. Until then, it's very hard. I, as an employer, have a hard time mandating what my employees do with their personal health choices; it feels awkward. You know, I'm stuck paying for it. I really wish I wasn't paying for it. I'd rather give them the money because they would be doing such a better job. I have some people who'd be stoic and some people would be mountain bikers and some people who'd feel ripped off and they wish they could be more hypochondriacal, you know, they wish they could get full body scans every 10 minutes. By giving what the average needs, we're giving nobody what they really want and so the PHRs will kick in when people are probably forced in the position where they start to take charge.
Ann Fishman: How do you think Obamacare is going to impact this industry and how do you think this industry will interface with Obamacare?
Jonathan Bush: Are you referring to the reform bill?
Ann Fishman: Healthcare reform passed this year.
Jonathan Bush: The reform bill, yes. Well, we don't exactly know what'll happen. We don't know how much of it will stay. One thing that Obamacare did was it caused most of the people who voted for it to have hotly contested re-election runs.
Ann Fishman: We're right on the edge of finding out how that's going to go.
Jonathan Bush: So they're getting an F you very much from their voters because I think there's a sense that checks are being written that can't be cashed and there's a little bit of anxiety about that. That anxiety passes even if we don't figure out how to cash the check. We, as a society, grow used to the checks we've written that we can't cash after a few years. So it could actually be that it'll just settle in. And if that happens I think in almost every scenario the problem solvers will get involved and things will be complicated. And so this pressure that was on docs as a result of the HITECH Act is assinuated to be able to be in a position to deal with a lot more complexity and that'll be solved by selling your practice, merging your practice, getting onto the cloud-based services, doing something to address or becoming a buff. You know there will be these guys, "I just finished my NC-10 workout, my team's certified. I sent my ladies and my practice out to Denver to get the extra help at MGMA". There will be guys who do that and that's terrific. You want that. You want the crazy ones. The one thing that I'm most concerned about across everything going on in healthcare is losing the crazy ones. The nice thing about medical practice, with all of its problems in the days before this consolidation and probably in the days after this consolidation blows up, is you've got these wacko who can do whatever they want with their little business. We had a guy - customer number four - he was doing his billing on a Mac! You can do this apparently. And so he was a wacko there and then he's like, no, I'm think I'm going to go from the Mac to the Internet. Everyone was like, you're a nut, you know. Did very well. And those crazy one paved the way for the more conservative ones and today, we are the only national health information backbone in this country, such as we are, with only 25 million records. So if we didn't have those crazy ones, I'm not sure we would have survived. I want to make sure that all the new entrants into healthcare, the future athenahealth's, and EHRtv's for that matter have some wackos to sell to when they're just starting out.
Dr. Eric Fishman: Now we've spoken about securities - and I don't know if I've just been called a wacko - but if so, I guess I'm going to say thank you.
Ann Fishman: I think in his economy that's a compliment.
Jonathan Bush: A fellow wacko which is a badge of honor. It's absolutely a compliment.
Dr. Eric Fishman: So let's go from security, which is a prime interest to Ann, to securities. The last time we spoke you were bringing SEC and the auditor.
Jonathan Bush: Yes, yes.
Dr. Eric Fishman: That's obviously all past and just like explosive growth in the recent past. Tell us what happened in the last few days.
Jonathan Bush: Well, you know, growth comes in waves. You put it in one end of the sausage maker and you can't tell anybody about him cause you don't want to put pressure on your people to deliver at all costs the way Bausch and Lomb did back in the day. It's an eco system that spawns corruption and corrupt thinking if you have to hit a number. So I don't tell anyone what we're selling and I move them through the sausage maker at the pace that they need to go. So as a result, the doctors out of the network bounces around. I promise you I can make it look smoother but Evil Bill and Evil Ted would have to take over the excellent adventure cause I don't want to get into that. And so if you have a company that grows very quickly and grows in fits and starts, you're going to have a volatile stock. But over time what I hope is that volatility is a sign of respect, it's a sign of credibility that we're not b.s.ing anybody.
Dr. Eric Fishman: What goes down must go up.
Jonathan Bush: Yes. Well, unless things go badly but you'll see that. The big indicators of how athena is going: are we performing better every year for our clients than we did the year before. Our first findings of our first customers on athenaCommunity: 20 percent reduction in no-show rates. That's all money, all money.
Dr. Eric Fishman: No-shows are expensive.
Jonathan Bush: Oh, my God, it's huge. Lost inventory. So those numbers we keep putting them up on the board. Next year, we're going to be talking about referrals and authorizations that we do for people both for the sender and for the receiver. Little bit of Facebook going on there, you know, take both sides of the social relationship. All of those things are working better than ever; that underlying financial value to the user is still there. Satisfaction is another one. We look at 85.7 percent, four and five out of five in answer to the question: I would refer athenaHealth to my best friend or colleague or most trusted friend or colleague, something like that. Everybody has to ask two people in the customer base and I called my two people. So those things are healthy. Employee engagements, we slipped a little there, 3.99. We usually get over four out of five employee engagement according to the Gallup survey. That one's almost where it should be but most of them are well over where they should be. That's the real health of the stock.
Dr. Eric Fishman: How you doing?
Jonathan Bush: Then the stocks and the earnings. I wrote the board report for Q3 and I said I felt like I'm at the helm of a giant caterpillar that lunges forward and when you see it in the lunge position it seems to be going very, very quickly but then for the next couple of minutes, it's just coiling up again. And then it will lunge again. So when it's lunging, everybody thinks it's unbelievably long and fast and then when it's curling up again, nothing's happening in the front. So that's kind of the way I think good companies should be run.
Dr. Eric Fishman: Ann's going to have some questions for you in a little bit about some interesting ideas.
Jonathan Bush: Good.
Dr. Eric Fishman: But that's going to come off the camera.
Ann Fishman: That'll be off the record.
Dr. Eric Fishman: Thank you.
Jonathan Bush: I wonder why that is.
Dr. Eric Fishman: As always, very entertaining.
Jonathan Bush: Well, thank you, guys. You make a great team. I'm thrilled that you came to the athenahealth booth. Take care.
Ann Fishman: You're the best. Thank you, it was great.
Jonathan Bush: Take care. Thanks a lot.
Dr. Eric Fishman: Jonathan, thank you.
Ann Fishman: This is Ann Fishman with EHRtv. We've been with Jonathan Bush. Thank you so much.