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Leading vendor of cloud-based services for physician practices and inpatient settings, Athenahealth, Inc. (ATHN - Analyst Report) recently announced that it will team with MedOasis to provide a billing offering for anesthesia cases. This offering will incorporate MedOasis’ contract and compliance knowledge along with coding for anesthesia procedures, with Athenahealth’s claims processing know-how.  

The outcome of this amalgamation of the knowledge of the two companies will be a improved billing product for anesthesia cases. Its specific rules for payors will lead to better cash flow. The offering takes its account complications inherent to anesthesia practice. 

MedOasis is committed to aid anesthesia practices improve their cash flow and income. The company manages both the collection and billing functions for its clients.

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 is expected to help Athenahealth 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) designed for physician practices. Its EHR product (athenaClinicals) is a key player in ambulatory settings.

We believe that sales of athenaClinicals are likely to remain robust. 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’s medical practices.

Athenahealth is geared to enter the enterprise segment through its strategic alliance with Microsoft (MSFT) and the acquisition of Proxsys, both completed in 2011. The company has recently signed on, and executed several enterprise-sized deals, which provide it with a credible and referenceable client base. In early Jan 2013, Athenahealth signed a definitive agreement to take over Epocrates, a provider of point-of-care digital solutions in the healthcare industry. The acquisition will enable Athenahealth to increase its user network and improve its brand awareness.

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

The stock currently retains a Zacks Rank #5 (Strong Sell) rating.

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