The Bush Health-Care Solution

Jonathan Bush and Todd Park sat in their offices in a San Diego birthing clinic in 1997, listening to the urgent and beautiful sounds of a baby's first gulps of air from the birthing room nearby. The cries were music for the two fresh-faced former Booz Allen Hamilton health-care consultants, 28 and 24, respectively, who had decided they'd learned enough to run a physician's clinic better and more efficiently than the doctors could. On the advice of Bush's wife, Sarah, who had trained as a midwife, they decided they would buy a birthing center, learn how to run it, and then franchise a nationwide network of clinics that viewed pregnancy as a holistic experience rather than as a disease. They raised $1.6 million from family connections, moved into flea-bitten apartments, dressed in khakis and blue shirts in hopes of fitting in with the Birkenstock-shod staff, and set up shop, fueled more by enthusiasm and idealism than experience. They named their company Athena Healthcare, after the goddess of strength and wisdom (and also because it started with the letter A).

But it wasn't long before those cries of joy turned into wails of desperation -- coming not from the babes upstairs, but from Bush, a first cousin of President George W. Bush, and Park. Their practice was in its infancy, but risked a premature demise. With no system to track their outstanding claims to insurers, they had no idea what was owed to them or when they might collect it. Caught in a classic cash-flow crunch, Bush and Park were going underwater faster than one of the expectant mothers in the birthing tubs above them.

Scrambling to find a solution, they hired Park's little brother and computer whiz, Ed Park, who built a program to help them run the business. And they quickly realized that they were not alone. What they faced was, in fact, the norm: a vicious quagmire in which reams of paper, unprocessed claims, and insurance snafus were preventing doctors from doing what they had gone to medical school to do -- help sick people get better -- and often driving them out of business altogether. Although the pair loved their baby business, they couldn't raise enough money to run it. The sweet spot, it turned out, was in harnessing the technology they had created to help other doctors run their practices.

And so Athena Healthcare became athenahealth, a company that takes over most of the administrative junk associated with running a doctor's office. Somehow, Bush, athenahealth's CEO, and Park, its chief development and chief marketing officer, transplanted their zeal for birthing babies into the less-scintillating world of claims processing -- one of the most opaque, byzantine, and unsatisfying businesses out there. In doing so, they managed to create a corporate culture in which "athenistas," as they are called, see their jobs not as processing claims but instead as saving the world, one messed-up strep-culture bill at a time. Today, athena, with $39 million in 2004 revenue, is the largest company in its fragmented field, handling more than $1.4 billion in claims annually. Its main product is a Web-based service that helps doctors run their practices more efficiently and more profitably.

Bush, whose father is Bush 41's brother, says he's had only one real conversation with the current president about his company. That came during a June 2001 visit to the White House. "We hung out for a little while," Bush says. "I told him what I did. He said, 'You're not really the CEO!' I said, 'Yes, I am.' Then he pulled out this spreadsheet and said, 'I'm into this stuff. I think there's a huge 20% cost opportunity that can be found through investment in IT.' I was pretty thrilled that he valued what health-care IT could do."

There's certainly room for improvement. According to athena, there's an average 72-day lag from the time a medical practice submits a claim to when it actually gets paid. Even worse, between 5% and sometimes 35% of the claims will never be collected, even though doctors spend up to 10% of their revenue paying people or buying systems to do just that. "If you told anyone else in America, 'I'm going to pay you 65 days late, randomly deduct 5% of your paycheck without telling you, and make you pay me a tax of 8% to 10% of your paycheck,' you would say that's absurd," says Park.

The notion of outsourcing billing services is hardly new in medicine. There are thousands of mom-and-pop outfits and many very large companies that do such work. But athena has some special features, starting with the fact that it takes 1% to 7% of a doctor's collections rather than charging a flat amount. "The whole idea of risk sharing is their differentiator," says Barbara Kelly, research director at Gartner. Athena may also be the only company that unites both the front and back ends of a doctor's office. It checks that the patient has valid health insurance and verifies his copayment before he comes in. Athena then files claims on behalf of the provider, collects and deposits checks, and examines rejected claims to find out what went wrong. For its more than 4,000 customers, athena has reduced average days in accounts receivable to 47 and boosted revenue by 5% to 10%.