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Have a breakthrough idea in Health IT? Test it with athenahealth’s innovation program

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Disruption and acquisition are the dual goals of an innovation program run by health IT firm athenahealth, appropriately named More Disruption Please.

What began as an event to bring together CEOs of promising health IT companies atop a mountain in Maine for an honest gripe session about what prevents young companies from gaining a footing in the healthcare industry has now morphed into a formal innovation program.

The goals are simple: support novel health IT companies that want to shake up how things are done in healthcare and along the way identify acquisition targets, explained Kyle Armbrester, head of business development at athenahealth, who runs the MDP program.

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Kyle Armbrester, Head of Business Development , athenahealth

Kyle Armbrester, Head of Business Development , athenahealth

The members of the group – that include entrepreneurs, academics, venture capitalists, small and medium health IT companies – have ballooned to more than 1,000 from the initial 30, Armbrester said.

Anyone interested in health IT can become a member, but in order to become a MDP partner where they can leverage athenaHealth’s resources – technological, financial, legal and other departments – and sell to its customer base of 40,000 providers they need to demonstrate a few qualities. Scale for one, but also the ability to help athena’s customers – in other words either increase revenue of the providers or decrease their office work load and drive down inefficiencies, Armbrester explained.

If these companies do an exceptional job of doing that, then they have a shot at being acquired.

Three companies have already achieved that. The first was Proxsys, which helps to send referral data electronically and is now sold under the name of athena Coordinator. In late 2012, athenahealth brought Healthcare Data Services, a healthcare data analysis firm that can also helps payers and providers manage their patient population, into its fold.  And the most high-profile acquisition came in January, when it bought Epocrates, the mobile application firm.

Being a MDP partner means that the company has a way to sell its products/services to athenahealth’s provider base. The company does not ask that the MDP partners share revenue with them. Nor does athena take an equity stake in those firms.

“Right now we are wanting to lower the barriers to entry,” Armbrester said. “We just want them to be successful so long as they are driving revenue to our clients or decreasing inefficiency. Doing either one of those actually hits our bottom line as well.”

But to qualify as a partner, MDP member companies need to have at least one paying client and some source of funding – be it through debt, convertible note, angel or venture or bootstrapped mechanism.

“They need to be a little more viable than a guy and a girl in a garage working with a concept,” he said.

But guys and girls in garages do not despair – athenahealth is purchasing a space in Massachusetts where it plans to incubate  five very early stage companies from the MDP member base and help them get a head start similar to the way other accelerators do.

“Healthcare IT is at a tipping point right now. It’s coming out of the Dark Ages,” Armbrester said. “I think we’ve convinced a lot of the players that the internet is actually an important thing and it’s not going away and that we need to play with it. We want to be viewed  as the catalyst for a lot of that change.”

 

[Photo Credit: Disrupt from BigStock Photo]

 

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Arundhati Parmar

By Arundhati Parmar

Arundhati Parmar is the Medical Devices Reporter at MedCity News. She has covered medical technology since 2008 and specialized in business journalism since 2001. Parmar has three degrees from three continents - a Bachelor of Arts in English from Jadavpur University, Kolkata, India; a Masters in English Literature from the University of Sydney, Australia and a Masters in Journalism from Northwestern University in Chicago. She has sworn never to enter a classroom again.
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