The Bush who pays the bills (continued)

By Oliver Ryan, Fortune

He graduated from Harvard Business School with honors in 1997 and decided to become an entrepreneur. The initial concept for Athena was a "roll-up" of women's health-care practices, an idea inspired by his then wife, Sara, a midwife-in-training who had recently given birth to the first of the couple's five children.

Bush's smartest move might have been cajoling Todd Park, a Harvard Phi Beta Kappa with whom he had worked in the health-care practice at management consultant Booz Allen, to come in as an equal partner. Park, whose restraint matches Bush's impulsiveness, came with his own impressive family story: a father who had immigrated penniless from Korea yet has managed to file more patents as a chemist at Dow Chemical than anyone but Mr. Dow himself. The pair raised $1.6 million from family and friends, and Athena took over two practices, one on each coast. He and Park soon got a primer on the dysfunction of the U.S. health-care system - stingy insurers, conflicting rules, stubborn doctors. They were nearly bankrupt after just 18 months. But there was a silver lining: Park had called in his computer-genius younger brother, Ed, who locked himself in a room and emerged with a web-based system designed to solve the kinds of problems plaguing them. In 2000, at the height of the dot-com boom, with less than $1,000 in the bank but a shiny new business model in hand, they picked up $10 million in venture capital and began rebuilding their company.

Today AthenaHealth has more than 500 full-time employees headquartered in the Arsenal, a converted World War II munitions factory on the Charles River outside Boston. The offices look like a cross between a tech startup and a mailroom for the Social Security Administration: There are shaggy computer prodigies sleeping on couches down the hall from a small army of nine-to-fivers in a claims-processing operation that consumes 13,000 pounds of mail a month - redirected from clients' offices and scanned into Athena's servers.

Doctors consistently rank billing and claims processing as their No. 1 problem, even ahead of malpractice suits. The average time between claim submission and reimbursement, according to Athena, stretches well past two months. And by most counts there are now nearly two full-time billers for every three practicing doctors. Bush's pitch to physicians is this: Because Athena bases its fee solely on the amount of reimbursements it recovers, it has a vested interest in getting them paid early and in full. Even after Athena takes its cut, Bush says, the average client increases revenues 3 percent annually because of greater efficiency. That makes for loyal customers. "In 2005 the client churn was 0.3 percent, and that includes doctors who were acquired or died," says Bush. "So we effectively didn't lose a customer." Furthermore, Bush claims, the system will get smarter as it gets bigger. Athena manages all the data on central servers, and the more claims that are fed into the engine, the more denial patterns can be spotted and the faster they can be eliminated.

Will AthenaHealth ultimately succeed? There's plenty of room for it to grow. Right now the company has only about 1% of the nation's doctors signed up. But adding new clients is a grinding job. More than half of America's roughly 700,000 doctors work in a private practice of five or fewer physicians. To reach those docs, Bush is adding staffers and has signed a sales partnership with hospital IT player Eclipsys. But he also has a host of big competitors to deal with. In November, McKesson said it would pay $1.8 billion for Per-Se Technologies, one of the largest outsourced-billing providers for medical offices. Wall Street darling Cerner is now repackaging its successful hospital software to target small practices. And GE is selling software through its 2005 acquisition, IDX. Athena needs to scale up before its competitors steal its momentum.

Not surprisingly, Bush's response is in keeping with family tradition he's out on the stump. Bush spends nearly half his time on the road, and when he's at the Arsenal, he charges around the halls infusing his "Athenistas" with the enthusiasm of what he sees as a grassroots movement.

Back in the suite at the Pierre, Bush is asked what he's looking for in an investment bank for Athena's IPO. "The fact is they can all do the job," he replies with typical candor, as the Piper bankers force smiles. "The reason we'd go with these guys is they might be able to deliver one of those big clients downstairs." And in a moment he's off, a Bush with his own campaign to win.

From the January 22, 2007 issue Top of page