3 Reasons Ascension, Athenahealth Cloud Deal Matters

1 7 Portals Powering Patient Engagement

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Three elements stand out about the decision by a division of Ascension Health, the country's largest nonprofit health system, to buy Athenahealth's cloud-based software for its ambulatory care services.

Athenahealth confirmed the deal last Friday, its largest yet in number of providers being served. Athenahealth will provide ambulatory cloud-based software services to more than 4,000 providers through Ascension Clinical Holdings, a division of Ascension Health. Services provided include revenue, patient and referral management, with the option to use Athenahealth's EHR system.

The first interesting thing about this deal: It shows that healthcare providers might be more open to "best of breed" software, rather than relying on one vendor for all their health IT systems.

Ascension's choice of Athenahealth reflects a shift in the industry, as companies begin looking for the best product available to fit their needs and not necessarily a single vendor approach. Cerner Corp. has provided Ascension with its EHR system since 2004. Ascension decided to go with the best ambulatory product for its needs, not one that provides both ambulatory and in-patient services.

[How does HIPAA affect healthcare cloud agreements? Read Microsoft Updates Cloud Agreement For HIPAA Rules.]

Athenahealth will be providing athenaCommunicator, a patient communications service; athenaCollector, a practice management service; and athenaClarity, a financial operations management and care coordination service.

The second standout element: Healthcare providers might be increasingly open to cloud-based software options. Athenahealth doesn't charge an initial fee for use of its software as do on-premises providers such as Epic. Instead, it charges a percentage of the amount collected by the provider.

"You make less, you pay less. You make more, you pay more," said Elise Ames, a principal at H.I.S. Professionals. "The pricing model lets it be affordable to a wide range of physicians."

Athenahealth started out as a cloud-based system with a percent-of-collection pay model and has kept that model since it entered the market in 1997. The deal with Ascension is a confirmation of the success of that model, Ames said.

Finally, the third interesting element of the deal: Athenahealth ramps up its credibility as a large-scale ambulatory vendor.

"This deal is going to make Athenahealth more of a presence in the stand-alone ambulatory systems," Ames said. "It will enable them to be comparable in size and in market share to some of the other players like eClinicalWorks and Greenway Medical Technologies." Both eClinicalWorks and Greenway offer cloud-based ambulatory software services.

Ascension didn't disclose the financials of the deal, but Athenahealth big deals like this one will allow Athena to invest in product development, which will improve the system for all of Athena's customers.