athenahealth — Investor Day (December 2009)
136 slides from athenahealth's investor day presentation, Dec 3, 2009
Slide 1: Second Annual Investor Summit December 3, 2009
Second Annual Investor Summit December 3, 2009
Slide 2: Welcome
Welcome Jennifer Heizer Senior Manager, Investor Relations
Slide 3: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements about athenahealth, Inc.'s business that are not historical facts, including projections regarding our future expectations, financial performance, plans, and prospects. Such statements may constitute forward-looking statements, for purposes
Slide 4: athenahealth Overview
athenahealth Overview Jonathan Bush President, Chairman & CEO
Slide 5: Investor Summit Plan: From Why to How to What
Investor Summit Plan: A Brisk March From Why ? to How ? To What ?, all by 2:30pm! Why? - What are we driving at? How? - Our frame for thinking, deciding, and operating Stability: People and Process Discussion Performance: Client Results Discussion Followed by a client perspectives panel Profitabilit
Slide 6: Why: Good Businesses Live With An Ending In Mind
"Why": Good Businesses, Like Good People, Live With An Ending To Their Story In Mind Live With An Ending To Their Story In Mind Live With An Ending To Their Story In Mind From the beginning, we saw an opportunity... To improve business results for physician practices That opportunity drives our miss
Slide 7: In Health Care Administration, Moore's Law Does Not Apply
In Health Care Administration, Moore's Law, the Basic Rule of Innovation, Does Not Apply Physicians receive over 1,000 faxes per month1 ~60% of all claims payments are printed and mailed by payers to providers for manual reconciliation2 Only 4% of physicians have adopted a "fully functional" EHR3 Ph
Slide 8: Basic Conditions for Innovation Are Weak in Health Care
Moore's Law Has Not Applied Because the Basic Conditions for Innovation are Weak in Health Care Certain conditions must be present in order for innovation to flourish: Diverse crowds of buyers - here's to the crazy ones? Freedom to invent/refine - highways full of black Escalades Price/product trans
Slide 9: In Medical Offices, We Found Key Ingredients of Moore's Law
BUT, in Medical offices, We Have Found Some Key Ingredients of Moore's law Over 200,000 discrete business who can make their own decisions - eureka, the crazy ones! 1 Physicians directly or indirectly are responsible for 70-80% of total healthcare spending2 They are generally rational, self-interest
Slide 10: Health Care's First Cloud: Information Infrastructure
We Have Used These to Form Health Care's First Cloud: We Call It Information Infrastructure An infrastructure that connects "say" with "do" is the single biggest obstacle to further innovation in healthcare As such, we endeavor to use our business model to justify construction of shared resources Ro
Slide 11: Our Software-Enabled Service Is New To Health Care
Our "Software-Enabled Service (SeS)" is New To Health Care Software ASP SaaS SeS Low High Connection to Outcomes High Recurring Revenue Low High implementation costs Low ongoing revenue for app use No connection to outcomes or performance No app use overlap between vendor and client No visibility in
Slide 12: Our Network Delivers Profitable Business Services
Our Network Delivers Profitable Business Services 2000 2007 2010 Launch Year And Now... Anodyne AnalyticsTM: A leading revenue cycle BI solution 2-8% Price as % of Collections 1-4% TBD
Slide 13: All Services Based on Shared Responsibility for Outcomes
All Services are Based on Shared Responsibility for Outcomes athenaNet Schedule, check eligibility Alerts on Patient Payments, creation of Slip, collect co-pay Patient payment, schedule next visit Submit reports and collect payment on claims and P4P Collect or Clinical s Communicat or Capture proble
Slide 14: Creation of athenaOne
These Services Are Becoming More Interdependent: The Creation of "athenaOne" athenaNet Schedule, check eligibility, collect co- pay Alerts on Patient Payments, Creation of Slip Fields for Capture of Claim and P4P Data Fields for Capture of Claim and P4P Data Patient payment, schedule next visit Subm
Slide 15: The How: We Use a Strategic Waterfall
And Now for the "How": We Use a Strategic Waterfall
Slide 16: The What: Our Mission Finances the Journey to Our Vision
Finally, the "What": Our Mission Finances the Journey to Our Vision We are paid only when the right thing happens to the practice Our business profits more when shared resources are built rather than single client resources athenaNet is a shared national network Our business model has more long-term
Slide 17: Our Vision for Health Care Is Very Much In Reach
We Have More Work To Do, But Our Vision for Health Care Is Very Much In Reach Today... Our network of ~15,000 physicians is growing at ~30% per year On our network performance is strong; clients do less work and earn more money - and all data is online Because our network connects stakeholders, it r
Slide 18: People & Process Discussion
People & Process Discussion Leslie Locke SVP, People & Process
Slide 19: Our Culture is Based on High Growth and High Innovation
Our Culture is Based on High Growth and High Innovation As we have grown, we have diversified into different locations based on local advantages Watertown headcount flat Belfast a key source of growth India an emerging innovation center for us We have also invested explicitly in understanding and tr
Slide 20: High Growth Requires Constantly Adapting To New Needs
And High Growth and High Innovation Require Constantly Adapting To New Needs Our mission requires innovation to disrupt the established model We require a population that can cope with the effects of innovation Intellectual curiosity and job design change More corporate lattice than ladder Internal
Slide 21: Investing in Ongoing Teaching and Learning
We Address This Challenge By Investing in Ongoing Teaching and Learning Teaching and learning recruitment Rapid learning infrastructure Top of the house succession planning High variable compensation focused on team scorecards Geography strategy that leverages different talents Location Brand Watert
Slide 22: A Community of athenistas Who Are Engaged
The Result is a Community of athenistas Who are Engaged and Stay With Us Key drivers of engagement center around transparency, accessibility to management and opportunity to grow Our turnover goals focus on developing people and exiting those who don't fit
Slide 23: Strong Senior Management Team With Succession Planning
We Have Built a Strong Senior Management Team With a Focus On Succession Planning
Slide 24: What's Next?
What's next? Focus on "connective tissue" between teams and locations in order to successfully scale our culture while allowing it to coexist with local cultures Evolve our compensation strategy to increase variable compensation and increase rewards for team performance Enhance people development ca
Slide 25: Client Results Discussion
Client Results Discussion Diane Kaye VP, Product Strategy
Slide 26: What We Sell is Client Performance
Across Our Portfolio of Products, What We Sell is Client Performance More Revenue Faster Revenue Less Work
Slide 27: Client Performance Results with athenaCollector
Our Results Show We Are Delivering On This Client Performance Story with athenaCollector athenahealth analysis: Q3 2009 results Collections Improved by 6.5%
Slide 28: DAR Reduction Driven by Clean Claims
DAR Reduction is Driven by Producing Increasingly Clean Claims Client DAR FPR Rate DAR under 40days* FPR over 90%* * As of Q3 2009
Slide 29: Case Study: Total Cost of Billing Lower With athena
And Based on Case Study, Total Ongoing Cost of Billing is 20%-30% Less With athena Enterprise client example: Billing as a percentage of revenue without athena: 7.8% of revenue 69% of cost was client staff 22% of cost was IT infrastructure and maintenance With athena, billing is 6% of revenue 58% is
Slide 30: Client Performance Story for athenaClinicals
The Client Performance Story for athenaClinicals is Clearly Emerging More Revenue 3.4% improvement in total number of appointments (6 months before versus 6 months post)1 Avg. of $1,500/month from P4P programs over 5 years, half of which is HITECH Act Faster Revenue Charge integration with athenaCol
Slide 31: Feedback on Client Performance for athenaCommunicator
Initial Feedback on the Client Performance Story for athenaCommunicator Is Compelling More Revenue Improved schedule density Improved self-pay collections Supports compliance with P4P/HITECH Act /NCQA Faster Revenue Reduction in self-pay DAR Less Work Reduction of manual phone calls, voice mails, le
Slide 32: Consistent Perspective on Client Performance
How Do we Do it? We Adhere to a Consistent Perspective on Client Performance and Deliver Against It More Revenue How much cash are you bringing in? Are you leaving cash on the table? Are you scheduling effectively with the right mix of patients Are your providers productive and efficient? What are y
Slide 33: Each Metric Backed By Detailed Network Analysis
Each Client Performance Metric Is Backed By Detailed Analysis from Our Network Are you leaving cash on the table? Are your providers productive and efficient? Missing slip rate Payer payment per total RVU E&M coding distribution Average code pre/post use of E&M coding $ collected per claim Sum of wo
Slide 34: Client Performance Managed Throughout Client-Facing Organizations
Client Performance is Managed Throughout Our Client Facing Organizations Sales educates prospects on the story Professional services reinforces the story during implementation Measures performance pre-athena Implementation success measured via key metrics like "% of clients whose FPR rate rises to a
Slide 35: PPR Faster Revenue Example
PPR Faster Revenue Example: "How fast are you getting paid?"
Slide 36: PPR Less Work Example
PPR Less Work Example: "How much effort are providers contributing to document patient visits?"
Slide 37: Client Workstation Alerts Account Managers
Beyond the PPR, the Client Workstation Alerts Account Managers To Performance Issues Notifies AMs of upcoming, required account service activities Displays birds-eye view of portfolio performance on key metrics Guides AMs on account performance against athena thresholds Additional key account data j
Slide 38: Clients Equipped With Self-Service/Training Tools
In Addition, Clients are Equipped With Self-Service/Training Tools on Performance athenahealth Training Video on 5 Stage Patient Visit
Slide 39: Operations Teams Support the Client Performance Story
Behind The Scenes, Our Operations Teams Support The Client Performance Story athenaNet Intelligence: Drives knowledge into athenaNet to create clean claims Tracks clinical revenue opportunities and deploys rules to ensure collection and reporting of metrics Monitors the regulatory and reform environ
Slide 40: We Monitor Our Own Performance Through Research
We Monitor Our Own Performance on These Promises Through Research Check in Intake Exam Perform Checkout Patient Leaves Patient Arrives "Patient Processing Machine" "Steady but Opportunistic" "Falling Behind and Frustrated" Preference Exclusively uses EHR Predominantly uses EHR, may jot paper notes O
Slide 41: Findings Help Us Improve Client Results
Findings From Such Research Help Us To Continually Improve Client Results "Truly Lean" Avg. mo. work RVUs = 509 ~1.134 work RVU per appt Patient density = 4 per hour "Falling Behind" Avg. mo. work RVUs = 316 ~0.798 work RVU per appt Patient density = 2 per hour Based on a CY2009 conversion factor of
Slide 42: We Adapt to Industry Change
Finally, We Adapt to Industry Change In Order To Manage Performance (c)2009 Healthcare Information and Management systems Society (HIMSS) Begin Level 1 activities (gap analysis, design, develop- ment, internal testing) Begin internal testing External testing and move to production Initiate payment r
Slide 43: Industry Change Significant Over Next 2-3 Years
Industry Change Will Be Especially Significant Over The Next 2-3 Years Note: All dates are estimates except 5010 dates which were taken from the CFR. ICD 10 Testing Development Privacy/Security Rules Issued Implementation HIE Development and Implementation Process Changes Needed to Qualify for $ Sel
Slide 44: Changes Impact Our Work, Clients Only Experience Benefits
These Changes Impact Our Work, But Our Clients Only Experience The Benefits This is the hallmark of a software-enabled-service model We take on the work of managing change so clients don't have to Case in point: HITECH Act Guarantee Program Available for current clients as well as prospects Our clie
Slide 45: Opportunities to Improve Client Results Further
Looking Ahead, We See A Number of Opportunities to Improve Client Results Further solidifications and network based claims around the athenaClinicals ROI Introduction of athenaCommunicator and the path toward performance success Continued enhancements to the Collector story
Slide 46: A Compelling Story That Only We Can Tell
On What We Already Believe is a Compelling Story that Only We Can Tell More Revenue Faster Revenue Less Work
Slide 47: Client Results Q&A Panel
Client Results Q&A Panel Jody Blakeway, VP, Client Services Jeremy Delinsky, VP, athenaNet Intelligence Susan Harmon, Director, Government Affairs
Slide 48: Presentation Break
Presentation Break Coming Up Next: Client Perspectives Panel
Slide 49: Client Perspectives Panel
Client Perspectives Panel Moderated by Derek Hedges VP, Enterprise Sales
Slide 50: Daniel C. Brown, M.D., Family Medical Associates
Daniel C. Brown, M.D. Owner Family Medical Associates
Slide 51: About Us
About Us 25 years of service in North and South Attleboro Diverse patient population from small cities Independent single owner Family Medicine practice with Obstetrics Total of 12 medical providers (11 MDs, 1NP) 8 providers working part-time Service two long-term care facilities 8,000+ active "pati
Slide 52: Life Before athenahealth
Life Before athenahealth Single location, 4 providers Full-time position dedicated to "paper chasing" Two full-time billers Using a traditional software-based PMIS (Medical Manager) Faced with $20,000 maintenance upgrade Large AR balance with significant write-offs due to denials, "too small to chas
Slide 53: How We Heard About athenahealth
How We Heard About athenahealth Started with revenue cycle product after seeing presentation at Massachusetts Medical Society meeting Left our information with representative Received regular communications and follow up from athena Once considered drawbacks of software approach, decided to adopt to
Slide 54: Benefits to Our Revenue Cycle
Benefits to Our Revenue Cycle: More Revenue, Faster Revenue, Less Work Revenue Cycle: Adopted in 2005 Opened second site in 2008, expanded number of providers over the years (4 to12) DAR improvement From high of 60+ days to current 26-30 days DAR levels held steady as ramped up from 4 to 12 provider
Slide 55: Benefits to Our Clinical Cycle
Benefits to Our Clinical Cycle: More Efficient Workflow and More Control Clinical Cycle: Adopted in 2007 Came on as early adopter (not beta) Researched several EMR options given early stage of Clinicals Experience with athenaCollector gave us confidence that Clinicals would be a comprehensive and us
Slide 56: Benefits to Our Patient Cycle
Benefits to Our Patient Cycle: Improved Scheduling and Communications Patient Cycle: Beta client since June of 2009 Comprehensive approach to the patient relationship ReminderCall performs all appointment confirmations Reduced up to six hours of daily staff time Now functioning as our answering serv
Slide 57: Long-Term Expectations
Long-Term Expectations P4P/Healthcare Effectiveness Data and Information Set (HEDIS) Emerging programs and requirements around standards of care It doesn't matter how well you take care of patients if you can't prove it in the form of clinical data athena will help us to run these types of reports e
Slide 58: Joel A. Feinman, Ph.D., Valley Medical Group
Joel A. Feinman, Ph.D. President Valley Medical Group, P.C.
Slide 59: About Valley Medical Group
About Valley Medical Group 30+ years of service in Western, Massachusetts Leading independent regional multi-specialty medical group 60+ Medical and Ancillary Providers 60,000+ "patient charts" Four full-service Health Centers in Pioneer Valley Excellent utilization, quality of care, and service per
Slide 60: Recognized by NCQA
And Now...Recognized by National Committee for Quality Assurance in Healthcare Achieved highest certification (Level 3) under NCQA Physician Practice Connections(r) (PPC) Patient-Centered Medical HomeTM
Slide 61: Life Before athenahealth
Life Before athenahealth Exiting from a pre-paid health plan in 2000, our Group understood how to provide population-based care We did not understand fee-for-service medicine and the complexities of navigating multiple payers and contracts We needed a comprehensive and efficient system to manage our
Slide 62: How We Heard About athenahealth
How We Heard About athenahealth athena was a young company in 2000 We did a web search when it was clear we could not bill for our services and we were burning through our reserves We were impressed with the "drive" of the athena people, their understanding of physician practices, and their willingn
Slide 63: Benefits to Our Revenue Cycle
Benefits to Our Revenue Cycle: More Revenue, Faster Revenue, Less Work Revenue Cycle: Adopted in 2000 Within weeks, we were receiving payments for services DAR improved and trend continues to improve over time From high of 60+ days to current 26-29 days Appointment management and "ticklers" for need
Slide 64: Benefits to Our Clinical Cycle: Smooth Implementation
Benefits to Our Clinical Cycle: Smooth Implementation Clinical Cycle: Adopted in 2009 We were an early adopter of EMR technology Unfortunately, our first product decision (not athena) proved to be a mistake We needed a sure bet that we could ramp up quickly and efficiently with all the features nece
Slide 65: Benefits to Our Clinical Cycle: Workflow Optimization
Benefits to Our Clinical Cycle: Workflow Optimization Available over secure connections anywhere the internet is available Enables real-time clinical data entry from any site of service; even from clinicians' homes while "on call", increasing safety and compliance Active connection with practice man
Slide 66: Long-Term Expectations
Long-Term Expectations Continued development of features to allow easier point-of-care service reminders Continued development of point-of-care clinical decision support tools necessary to take better care of complex patients Beta client for athenaCommunicator; a world-class patient portal Gives pat
Slide 67: Todd C. Rothenhaus, M.D., Caritas Christi Health Care
Todd C. Rothenhaus, M.D. SVP, Chief Information Officer Caritas Christi Health Care
Slide 68: Caritas Christi Health Care
Caritas Christi Health Care Largest community-based health system in New England $1.4 billion in annual revenue 6 Hospitals 55 communities in Eastern Massachusetts 2,300 physicians (350 employed) Strong nursing-home alignment Home care and hospice services Laboure College of nursing
Slide 69: Caritas Christi Strategic Challenges
Caritas Christi Strategic Challenges Re-emergence of capitation Access to capital Highly distributed system Ultra-competitive marketplace Need to "knit" together fragmented care models Historical under-spending on information technology
Slide 70: Caritas Christi Physician Network
Caritas Christi Physician Network 350+ office-based physicians Small and medium sized practices Inconsistent business processes Losing money Despite $70 million IT strategic plan, no definitive solution for our employed physician group
Slide 71: Find us a partner to help us Leapfrog ahead
"Find us a partner to help us to Leapfrog ahead."
Slide 72: Early Results with athenahealth
Early Results with athenahealth Wholesale replacement of PMIS in less than six months Native athenaCollector reporting superior to our previous data warehouse 20+ FTE reductions in staff Missing bills nearly zero
Slide 73: What athenahealth means to Caritas
What athenahealth means to Caritas Software and health care business models are rapidly changing Unfortunately, healthcare IT remains stuck in the 20th century... Expertise is at a premium Traditional HCIT systems are far too complicated and delivered as an empty husk No practice or health system ca
Slide 74: Operational Scalability
Operational Scalability David Robinson EVP, Chief Operating Officer
Slide 75: Operations Integrates Software, Knowledge and Work
Operations Integrates Software, Knowledge and Work as a Software-Enabled-Service We deliver an intelligent, network-based infrastructure utilizing a single instance web-based application This infrastructure supports rapid evolution and scale Owning the process increases knowledge of efficiency and e
Slide 76: SeS Operating Model Turns High Volume Inputs into Benefits
This SeS Operating Model Turns High Volume Inputs into Unique Benefits Knowledge Software Work 150,000 Claims 20,000 Checks 40,000 Clinical Docs 900 Phone Calls Daily Input Daily Results 150,000 Paid Claims $19mm+ Collected 10,000 Lab Results Posted 800 Issues Resolved Unique Benefits For athena: Wo
Slide 77: Highly Scalable Cloud Architecture
athenaNet is Supported by a Highly Scalable Cloud Architecture The world's first cloud-based platform for health care computing Horizontal scaling architecture enables unlimited scalability and better efficiency Decreased # of servers needed despite rapid growth in clients "Web pool" load balances c
Slide 78: Focus on Application Performance, Uptime and Security
We are Intensely Focused on Application Performance, Uptime and Security While volume has increased dramatically, athenaNet performance has steadily improved athenaNOC est. 2009
Slide 79: Network Architecture Allows Economies in Supply Chain Automation
Network Architecture Allows for Enormous Economies in Supply Chain Automation athenaNet Payer s Hospital s Pharmacie s Labs Patient Physician count up 94% ERA Rate up 125%
Slide 80: Knowledge Enables Us to Accelerate Performance
Knowledge Enables Us to Accelerate Performance and Improve Efficiency Rules engine captures and shares what we learn about payers as well as requirements for emerging P4P programs 40+ million permutations, 100's of rules/mo. 50% of rules firing in past mo. written in last 180 days In November, we we
Slide 81: Operations Team Supports a Global Execution Strategy
Our Operations Team Supports a Global Execution Strategy Cost-effective resources that evolve to accommodate growth Internal 583 Direct Employees External Two Independent Offshore BPO Partners Claims Processing Payment Posting Clinical Documentation Professional Services Account Management Client Se
Slide 82: Service-Based Approach Yields Operational Advantages
Our Broad, Service-Based Approach Yields Significant Operational Advantages Standardize Automate Learn Perform Aggregate We create a network via a single web-based application We learn the details to increase knowledge and automation We take ownership of the entire process by doing the work Work Kno
Slide 83: Process Improvement Example #1: Payer Enrollment
Process Improvement Example #1: Payer Enrollment for Physicians Background: Enrollment is the process of registering doctors on payer systems to allow the submission of claims and the receipt of payments. Proper enrollment is required to maximize electronic transactions (e- Claims, EFT, ERA, Eligibi
Slide 84: The Result: A More Scalable and Flexible Process
The Result: A Much More Scalable and Flexible Process Improved the quality, consistency and timeliness of the enrollment process Supports specialization among our enrollment agents - individuals do not have to retain all knowledge
Slide 85: Process Improvement Example #2: Clinical Document Services
Process Improvement Example #2: Clinical Document Services Background: The challenge of getting paper transactions into the chart - camp forms, paper lab results, etc - is a major obstacle to EHR adoption When building Clinicals, we eliminate this obstacle by letting clients direct their fax lines t
Slide 86: Monitoring of Volume Showed a Trend
Monitoring of Volume Eventually Showed a Trend 18% of Practice work originally printed from athenaNet! Clients either were not using our barcode tools, or the barcodes could not be read
Slide 87: Result: Focus on Utilization of Front-End Tools
Result: Focus on Utilization of Front-End Tools Redundant documents prevented from getting printed at all Annotation / e-Signature tool New barcode technology improves efficiency More resilient against streaky fax machines More likely to fit on a dense form New2D Barcode Old 1D Barcode
Slide 88: Scalability of the Implementation Process
Another Important Element of Scalability is the Implementation Process No software installation AT ALL (no capex) All interfaces embedded in athenaNet Rapid implementation Most time on configuring workflow, training staff and enrolling providers Due to Our SeS model, our implementation process is co
Slide 89: Collector Implementations Highly Scalable
Enterprise (150+ docs) Enterprise (150+ docs) Group Practices (4+ docs) Group Practices (4+ docs) Collector Implementations Highly Scalable Due to Virtual Capability and Self-Service Month s 7 5 3 1 Small Practices (1-3docs) All virtual imp No travel athenaCollector athenaClinicals Small Practices (
Slide 90: Plan to Expand athenaClinicals Virtual Capabilities
Enterprise (150+ docs) Enterprise (150+ docs) Group Practices (4+ docs) Some virtual imp Group Practices (4+ docs) Some virtual imp Next Year, We Plan to Expand athenaClinicals Virtual and Self-Service Capabilities Month s 7 5 3 1 Small Practices (1-3 docs) All virtual imp No travel athenaCollector
Slide 91: Scalability Supports Growth to 100,000 Physicians
Our Operational Scalability Supports Growth to 100,000 Physicians and Beyond Paper volume has remained constant despite rapid growth in charges processed
Slide 92: Operational Scalability Key Takeaways
Operational Scalability Key Takeaways We innovate rapidly because we have a network and one application Because we do the work we learn how to eliminate it Our process improvement focus drives benefit for all stakeholders Implementation becoming standardized and virtualized (and cheaper) We are posi
Slide 93: Operational Scalability Q&A Panel
Operational Scalability Q&A Panel Ed Park, Chief Technology Officer David Tassoni, VP, Operations Ryan Wise, VP, Process Innovation
Slide 94: Presentation Break
Presentation Break Coming Up Next: Market Awareness Discussion
Slide 95: Market Awareness Discussion
Market Awareness Discussion Rob Cosinuke SVP, Chief Marketing Officer
Slide 96: Efforts to Build Awareness and Drive Growth
Our Efforts to Build Awareness and Drive Growth are Unique and Will Intensify We have focused our go-to-market approach and expanded our sales teams Our channel partnerships provide us with exposure to key decision makers We have enhanced the athena brand messaging and added compelling creative cont
Slide 97: Focused Go-To-Market and Expanded Sales Force in 2009
We Focused Our Go-To-Market Approach and Expanded our Sales Force in 2009 # Reps Q3 2008* # Reps Q3 2009* Characteristics Focus Small Practice 1-3 docs Virtual sales Group Practice 4+ docs Field sales 15 20 Enterprise 150+ docs Corp-owned Biz dev as sales 20 18 0 5 Cross-Sell & Channels Up-sell serv
Slide 98: Small Group Segment: Our Fastest Growing Segment
Small Group Segment (1-3 docs): Our Fastest Growing Segment Sales Model: Virtual sales and implementation model (highly scalable) 30-60 day sales cycle Update from the Field: Notable increase in combined sales of Collector + Clinicals For athena overall, 30%+ rate of combined deals in Q309 v. 10% in
Slide 99: Group Practice Segment: Steady Growth
Group Practice Segment (4+ docs): Experiencing Steady Growth Sales Model: 90-120 day sales cycle - consultative, educational sale Focus intensified on this segment during 2009 after enterprise team formed Update from the Field: Our growth remains strong amid hospital acquisition activity Combined sa
Slide 100: Enterprise Segment: Up to Speed
Enterprise Segment (150+ docs): Up to Speed Sales Model: 120+ day sales cycle - senior relationships combining sales, consulting and business development Created dedicated team in Q109 with great results Update from the Field: Significant wins this year such as Caritas Christi & Cook Children's Stro
Slide 101: Cross-Sell Team: Pursuing Growth Opportunities
Cross-Sell Team: Pursuing Significant Growth Opportunities Sales Model: Dedicated expanded team in 2009 Partner with account management to educate clients about new services and generate leads Update from the Field: Clinicals sales brisk and picking up momentum ReminderCall adoption very strong Look
Slide 102: Anodyne Cross-Sell Opportunity and Channel Partners
Anodyne provides significant cross-sell opportunity to large groups and enterprises National partnership with PSS since 2007 for sale of Collector and now Clinicals National partnership with Eclipsys since 2007 for sale of athenaCollector Regional relationships: Medical Societies (15 total) Consulta
Slide 103: PSS World Medical Channel Team
PSS World Medical (PSSI) Channel Team: Driving New Meetings Sales Model: Partnership with 650 PSS reps covering 110 ,000 PSS clients in all 50 states athena sales specialists deployed across the country PSS reps earn commission and rewards for providing leads that generate deals for athenahealth; at
Slide 104: Channel Network Grows: Introducing QHR
And, Our Channel Network Continues to Grow: Introducing QHR QHR is the national market leader in hospital management: Est. 1977 by Hospital Corporation of America (HCA) 150+ managed hospitals 6,000+ affiliated providers; 1,000 owned/employed providers athenahealth joins QHR's Strategic Service Partn
Slide 105: Awareness Continues to Be a Major Challenge
Despite All of This Success, Awareness Continues to Be a Major Challenge Optimal Spot Awareness and Favorability for the Entire Industry Is Relatively Low 2008
Slide 106: Crisp and Differentiated Messaging Strategy
In Marketing, We Developed a Crisp and Differentiated Messaging Strategy Vision: To make health care work the way it should Mission: To be the most trusted business service to medical groups Brand Promise: There is a better way Key Messages: Web-based software-enabled-service Low investment: no expe
Slide 107: Creative Platform to Communicate Messages
We Developed a Creative Platform to Effectively Communicate these Messages Clear Headline Gets directly to the heart of everyone's fears and hopes High Quality Photography National Geographic caliber, documentary photography of our actual clients at work Differentiated Approach Quickly provides cont
Slide 108: Messages Brought To Life with Emmy-Award Winning Talent
We Brought These Messages To Life with Emmy-Award Winning Talent athenahealth Animated Overview athenaClinicals Deerpath Testimonial athenaClinicals Masucci Testimonial athenaClinicals Client Testimonial Montage athenaClinicals Schuermann Testimonial athenaClinicals Service Overview athenaCollector
Slide 109: A New Approach to Marketing in 2009 Video
A New Approach to Marketing in 2009 Video
Slide 110: New Messages Landed Numerous Media Placements
These New Messages and Content Landed Numerous Media Placements
Slide 111: Bold Guarantee Program for HITECH Dollars
To Emphasize Key Messages, We Launched a Bold Guarantee Program for HITECH Dollars Increases awareness Puts us on the map as a top tier EHR player with the key national and regional influencers Supplies a powerful "hook" Brings the difference of our model to life with a guarantee on payment rather t
Slide 112: Broad Public Relations Campaigns
And We Continued To Tell Our Story Through Broad Public Relations Campaigns Integrated PR campaign with Cook Children's and Microsoft Conducted 14 national broadcast interviews around health reform, HITECH and PayerView Generated over 80 million unique impressions through print, online, and broadcas
Slide 113: Marketing Initiatives Drove Record Leads
These New Messages and Content Supported Marketing Initiatives that Drove Record Leads Response volumes up significantly over last year Major Initiatives in 2009: Integrated media campaign Launch of new website HITECH Act Guarantee Program Major enterprise client announcements Regional fly wheel cam
Slide 114: Our Efforts Have Improved Favorability
While Awareness Growth Will Take Time, Our Efforts Have Improved Favorability Optimal Spot 2008 Optimal Spot 2009
Slide 115: In 2010, Improving Market Intelligence and Coverage
In 2010, We Are Radically Improving Market Intelligence and Market Coverage We are investing in new market intelligence infrastructure, building a new "social map" of the industry Leverage telemarketing to contact EVERY PRACTICE IN THE COUNTRY Use that infrastructure to treat every medical practice
Slide 116: New Product Initiatives and Easier On-Boarding
We Will Also Launch New Product Initiatives, and Make On-Boarding Easier "athenaOne" Integrated product suite grounded in % of revenue pricing approach Experiment with "athenaCommunity" Leverage the power of our client base to connect to new prospects Simplified implementation process Best practice
Slide 117: Key Takeaways on Market Awareness
Key Takeaways on Market Awareness Our marketing and sales teams have expanded and are equipped to drive growth We have a clear, differentiated approach and brand messages that the market is responding to Our new partner programs are expanding and will accelerate awareness within key markets We have
Slide 118: Market Awareness Q&A Panel
Market Awareness Q&A Panel Nancy Brown, SVP, Biz Dev & Gov't Affairs Robert Hueber, SVP, Sales Pierre Valette, VP, Content Communications
Slide 119: Financial Overview
Financial Overview Carl Byers SVP, Chief Financial Officer
Slide 120: We Have a Solid Financial Foundation
We Have a Solid Financial Foundation Notes $30MM deployed for Anodyne in Q4 athena DAR is 49.6, down 3.8 days Y- o-Y Deferred tax asset of $12.3MM STRONG BALANCE SHEET Cash/debt ratio of 8.6x As of September 30, 2009 EXPANDING PROFITABILITY Adjusted Operating Income 61% annual growth Adjusted figure
Slide 121: We Have Delivered Strong Growth
IPO We Have Delivered Strong Growth 28% growth 36% growth 41% growth Quarterly Revenue ($K) 2006-Present
Slide 122: Our Opportunity Remains ~100x Our Size
Our Opportunity Remains ~100x Our Size 1 CMS data, 2007 (most recent data: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/proj2008.pdf) 2 Assumed rate of spending within medical practices for services that athenahealth offers on an outsourced basis Total = ~$34bn+ Revenue cycle market opp
Slide 123: Our Margins Expand As We Grow
Our Margins Expand As We Grow Adj. Gross Margin: ~70 bps per qtr Adj. EBITDA Margin: ~121 bps per qtr Adj. Op. Inc. Margin: ~185 bps per qtr Adjusted figures add back stock-based compensation expense and other non-recurring charges.
Slide 124: Profitability is Driven By Our Model
Profitability is Driven By Our Model Clear Value Proposition: More $$$ Faster Less Work High Client ROI: Low capex Revenue up Costs flat High ATHN Profitability: Web/rules remove work Automation removes cost Value drives retention Our Business Model: Web-based app Patented rules engine Full service
Slide 125: A Provider is Worth Much More To Us
A Provider is Worth MUCH MORE To Us ATHeNa Marketing and Sales Implementation Year 1 Year 2-11 Simplified Illustration: 10 physicians Cumulative: ($100K) ($95K) $100K ($100K) $200K $2.5MM (w/ Xsell) ($1.0MM) ($80K) $25 K $1.5MM MeDical softwaRe eXample $20K Cumulative: $340K ($50K) ($25K) ($20K) $20
Slide 126: We Are Worth Much More to the Industry: The Network
What's More, We Are Worth Much More to The Industry, Because We Can Deliver The Network The core problem: Fragmented, providers who are disconnected from each other in terms of workflow, information and related coordination activities This drives high cost due to: Duplication of effort, excessive co
Slide 127: We Will Continue to Grow Quickly
We Will Continue to Grow Quickly During our IPO, we committed to 30% or better growth in every compare period through 2011 So far, so good: 33%, 35%, 36%, 35%, 35%, 47%, 42%, 42%, 37% We are confident we will meet this commitment through 2011
Slide 128: 2011 Ratios in Sight
2011 Ratios in Sight Adj. EBITDA Margin1 Adj. Op. Margin1 Adj. Gross Margin Growth 2011 Target Model c. 9/07 IPO 27-32% 23-27% 57-60% 30%+ 2011 Target Model Revised c. 12/08 30-35% 25-30% 61-64% 30%+ Adjusted figures add back stock-based compensation expense and other non-recurring charges. Long-Ter
Slide 129: Progress Toward 2011 Goals Will Be Steady
Progress Toward 2011 Goals Will Be Steady Last year, we had a major investment program in 1H09 which resulted in flat Y-o-Y gross margins at the start of the year In 2010, gross margins should expand in every year-over-year period Gross margin and G&A leverage will drive operating income expansion i
Slide 130: 2011 Is Not the Primary Focus
That Said, 2011 Is Not the Primary Focus Our long term goal is to become The Network: A ubiquitous presence driving operational and financial outcomes Our "hedgehog" remains: best in the world at getting physicians paid for doing the right thing This is our focus for all services, including Clinical
Slide 131: Our 2014 Goal is Growth and EPS
Our 2014 Goal is Growth and EPS We have recently completed a new five year plan, based on which we now expect to continue to achieve 30%+ organic revenue growth through 2014 In addition, we aim to drive annual EPS by at least 10 points more than that Thus, rev. growth of 30%+ should be paired with E
Slide 132: Other Points of Interest
Other Points of Interest Tax rate The rate exceeded expectations given non-deductible items 123R stock comp expense and acquisition costs not deductible These expenses are a high percentage of net income today We still expect a steady decline toward the low 40s Guarantee Accounting Program launched
Slide 133: Summary and Parting Thoughts
Summary and Parting Thoughts Today, we reviewed our status: A record of growth and innovation; a boundless opportunity; and the culture and resources necessary to go after it At IPO, in this room we said it was merely "the end of the beginning" More than two years later (and more than 12 years since
Slide 134: Management Q&A Panel
health Management Q&A Panel
Slide 135: Closing Remarks
Closing Remarks Jonathan Bush President, Chairman & CEO
Slide 136: Second Annual Investor Summit December 3, 2009
Second Annual Investor Summit December 3, 2009