On Wednesday, the Watertown, Massachusetts-based electronic health record (EHR) and practice management vendor athenahealth, Inc. announced that its board of directors had appointed Jeffrey Immelt, former chairman and CEO of GE Healthcare, as chairman of athenahealth, effective today. “We are thrilled to welcome Jeff as the new independent chairman of the athenahealth Board,” said Dev Ittycheria, chair of the board’s nominating and corporate governance committee, in making the announcement. “Having considered a number of highly qualified candidates, the Board determined that Jeff’s deep expertise and broad relationships in the healthcare industry, combined with his drive for industry transformation through innovation, ideally position him to be a great partner to the Board and management team as we work to profitably grow and scale the Company and drive value creation.”
Jeffrey Immelt
The announcement, posted to the company’s website, stated that, “Over the past 20 years, Mr. Immelt has established himself as one of the most respected leaders in healthcare. While at GE, Mr. Immelt helped grow GE Healthcare from a $3 billion enterprise to a $20 billion respected innovator with unique assets and capabilities. GE Healthcare diversified its portfolio from imaging to life science and digital services, building leadership positions by delivering valuable solutions to providers and patients. GE Healthcare was a consistent grower in revenue and profits. Mr. Immelt also brings a deep understanding of system economics and patient outcomes given GE’s position as a larger payer of healthcare benefits.”
This management shakeup was not a complete surprise; in an article published on Aug. 1, 2017, The Wall Street Journal’s David Benoit had reported that “Jonathan Bush, the sometimes outspoken founder and head of athenahealth Inc., will cede his chairmanship but stay as chief executive in a shake-up that has the backing of two of his biggest shareholders, months after activist investor Elliott Management Corp. piled into the stock. Mr. Bush will also give up operational control of the health-care-software company to a new president. Both roles are expected to be filled following searches with external candidates, the company said Tuesday” (Aug. 1).
Then, on Feb. 3, MedCity News’ Erin Dietsche reported that, “During an earnings call with analysts on Friday, athenahealth CEO Jonathan Bush said the healthcare industry is ‘in the midst of a sugar low after years of rapid growth, driven by government stimulus. Demand for our services has been weaker than we expected this past year,’ he added, according to the Seeking Alpha transcript of the call.” Dietsche’s story noted that, “On Thursday, the Watertown, Massachusetts-based company reported fourth-quarter revenue of $329.2 million, versus $288.2 million during the same time period of 2016. Full-year revenue also increased 13 percent to $1.22 billion.” Still, she reported, “Bush highlighted that the company didn’t meet its bookings goals for 2017. For 2017, the EHR vendor’s consolidated bookings were $293 million compared to $348 million in 2016.”
The MedCity's Dietsche further reported that, “During the Q&A portion of the call, one analyst pressed the issue, asking how much of the ability to drive better bookings is in athenahealth’s control. Bush said his company is moving toward being a national network that provides services, which is something everyone in healthcare will need.” And it quoted him as stating that “The economics of medicine just do not support individual kind of craft brewing of the back office of medicine, and it’s getting worse,” he said. “So we’re really down to not whether but when. What we are doing to draw people into market is, as I have said, deepening the services so that you can see real cash more certainly sooner by switching.”
In the official announcement Wednesday, Bush was quoted as saying that “Jeff shares our vision for more connected, efficient, and human-centered healthcare; and like us, believes a platform-oriented business and technology strategy is fundamental to executing against that vision. His appointment as chairman is one of many important steps the Company has taken over the past year to enhance the Board and management team, as well as to strengthen and focus our operational and go-to-market strategy. I’m confident athenahealth will continue to create sustainable value for shareholders, open new opportunities for employees, and is well-positioned to not only deliver highly-differentiated benefits to both our current and future clients, but also to lead the industry’s next wave of innovation, openness, and efficiency.”
The announcement went on to say that “Mr. Immelt’s appointment as independent chairman is part of a series of strategic initiatives that athenahealth launched in 2017 to create a more focused and efficient company, drive increased levels of profitable growth, and enhance shareholder value. As part of these initiatives, the Company has added new expertise to its leadership team, including the appointment of a new chief financial officer and a new independent director. The Company expects the operating initiatives will generate $100 million to $115 million of gross pre-tax expense savings and significant margin improvement. With the addition of Mr. Immelt, the athenahealth Board has been expanded to 11 members, including nine independent directors. Mr. Immelt will make a financial investment in athenahealth,” the announcement added, “and plans to purchase approximately $1 million of athenahealth common stock in the open market.”
