Leading vendor of cloud-based services for physician practices Athenahealth ( ATHN - Analyst Report ) recently reported that Medford Medical Clinic will utilize its offerings.

Medford, Oregon-based Medford Medical Clinic is an urgent and primary care provider with 23 doctors plus other staff. Patients often get the bulk of their medical care at the clinic itself. Its wide range of services includes urgent care, neurology, radiology, lab, internal medicine and family practice.

Medford Medical Clinic will utilize Athenahealth’s composite cloud-based offerings including practice management tools (athenaCollector), Electronic Health Record service (athenaClinicals) and patient communication offering (athenaCommunicator). In addition, Medford Medical Clinic will benefit from the company’s intelligence tools under Anodyne Health Partners.

Athenahealth’s web-based deployment provides a low-cost scalable service while its flexible rules engine leads to higher efficiency in claims settlement. The Software-as-a-Service (SaaS)-based approach allows for a more flexible delivery mechanism that helps Athenahealth to win deals. The company has traditionally enjoyed high customer satisfaction rates, which facilitates a larger number of referrals.

Athenahealth’s unique business model makes it a strong provider of RCM services (athenaCollector) to small physician practices. Its EHR product (athenaClinicals) is a key player in ambulatory settings. We believe that sales of athenaClinicals are likely to remain robust, given the opportunity for physicians to earn incentive payments under the federal stimulus. In addition, the company will harness its newer products, namely athenaCommunicator and athenaCoordinator.

The company should benefit from its extensive athenaCollector client base, as only a minority of its subscriber base also utilizes athenaClinicals. Cross selling represents a real growth opportunity in the near term. In this regard, Athenahealth has made rapid strides in capturing the EHR business of physician practices. However, this segment is shrinking as hospitals increasingly absorb physician practices.

Athenahealth has geared itself for the enterprise segment through its strategic alliance with Microsoft ( MSFT - Analyst Report ) and the acquisition of Proxsys, both in 2011. The company has recently signed on, and executed several enterprise-sized deals, which provide it with a credible and reference-able client base.

Though the federal stimulus will gradually wind down, the replacement market is growing. Competition is fierce and larger competitors may benefit from the incumbency factor. Industry stalwarts, such as Cerner ( CERN - Analyst Report ) , offer long-standing seamless products integrating inpatient and ambulatory-care systems. Quality Systems ( QSII - Analyst Report ) and Allscripts Healthcare Solutions ( MDRX - Analyst Report ) are two other well-known competitors in a crowded field.