Critical Innovation In Healthcare Claims Processing: athenahealth CEO Jonathan Bush (Part 2)

SM: Entrepreneurs often have a chip on their shoulder from sources such as their families or surroundings. Do you think that applies to you?

JB: I had relatives who were in public service and people were casting stones at them, forming opinions about me, my parents and my brothers, without really knowing me. Perhaps that gave me a chip.

SM: OK, so you had come to the point at which you were going to do something entrepreneurial, healthcare related, and close to the doctor/patient ecosystem, correct?

JB: Right. The closest I got to that doctor/patient ecosystem was at Booz Allen Hamilton, where they were starting a healthcare strategy practice at the same time I was looking around for a first job, and that sounded like a good fit. I wanted to find some great healthcare leader and carry his bag and write his or her thank you notes. I could not find it, but Booz Allen gave me a great opportunity to learn about the space so I spent a couple of years there. I did a ton of work for health plans that wanted to get directly into the delivery of healthcare. They wanted to recruit physicians onto their side, a bit like Keizer. I thought it was interesting and exciting, but it did not work.

I had a buddy at Booz Allen named Todd Park, and I figured we could do it. We started talking about it one night when all the cubicles were empty. We started talking about how it could be done properly, how the insurance companies were not doing it right. They needed better information technology and a unique service approach. This was also right when Starbucks was exploding on the scene and we loved how Schultz had been a barista and had gotten every single bit of the service right. We noted that you never saw anyone do that in healthcare.

We decided we would find a sector of healthcare that had a retail component but was complicated enough that really good information technology would help. We ended up with OB/GYN because there were deliveries, surgeries, but also because women choose their own OB/GYN. You often get handed an oncologist or cardiologist by your primary care doctor but you choose your OB/GYN, and we liked that idea because a better service experience would lead to more market share.

That is how we started. I left Booz Allen and went to business school. I spent a year and a half writing a business plan for a women’s health practice management company that was going to revolutionize birth. We were going to treat birth as a wonderful healthy experience during which you sometimes get ill, as opposed to an illness,  which is how most American women get treated. We got very excited by it, we built a unique clinical model, we validated it with research, and we found the people doing the research and got them to be our first partners.

It was very exciting until we realized that we could not make payroll because we had to file those bloody medical claims. Each needed its own unique footprint of various kinds of information and it changed all the time. All kinds of bureaucratic garbage got in our way. We ended up building a website internally to try and keep track of what was going on in our own clinics front desks. That was the actual genesis of athenahealth.

I will never forget going around trying to raise money for a women’s health clinic at a $5 million pre-money valuation, and a VC from Texas offered me $11 million for the rights to athenanet. I figured that meant that either athenanet was worth a lot more than I thought or that my company was worth negative $6 million. That was a wakeup call. Todd and I went through a very painful series of conversations where we realized that some of what we were doing was so far before its time that it would not happen and that some of what we were doing was just enough before its time that it just might take hold.

SM: What year was that?

JB: That was in 1999.

SM: The Internet was already starting to gain a foothold. What did athenanet do that the VC found so appealing?

JB: I don’t know what he saw in it, but it was unique. It was web native which meant it would run on a modem connection. In 1999 wide scale broadband was not available. This thing worked leanly and quickly. It kept track of the little details that the hourly workers, who make most of the decisions in medical practice control, in very simple terms. It didn’t even do billing at the time, it just kept track of what you could bill and what information you needed to eventually bill.

This segment is part 2 in the series : Critical Innovation In Healthcare Claims Processing: athenahealth CEO Jonathan Bush
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