In this transcript of our recent podcast interview, AthenaHealth’s Chief Marketing Officer explains the rationale behind its pending purchase of Epocrates.
David E. Williams: This is David Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Rob Cosinuke. He is Senior Vice-President and Chief Marketing Officer at AthenaHealth. Rob, how are you today?
Rob Cosinuke: I’m well. Thank you.
Williams: Let’s talk about AthenaHealth’s purchase of Epocrates. Why is Athenahealth purchasing the company?
Cosinuke: The rationale is a pretty exciting for us. Athena’s core mission, which we live and breathe everyday, is to be care givers’ most trusted service.
If you think about Epocrates, they already have achieved this mission in spades. Epocrates has nearly 100% awareness in the marketplace. It’s actively used on a weekly or daily basis by half of working physicians in the United States.
Over 340,000 physicians use Epocrates and it’s incredibly well loved. There is a measurement that is used across industries called a “net promoter score.” And Epocrates, among physicians, has a higher net promoter score than even Apple computer users. So it’s highly trusted, highly used, well loved.
We are acquiring Epocrates because we share that same mission of being the most trusted service of health care providers, but also frankly to take advantage of that awareness and love halo that Epocrates has to help folks begin to understand Athena and our unique model of cloud-based services.
Williams: Epocrates is always used as the example of the one thing that doctors adopted en masse. It’s interesting that Athena is going after it now.
The folks that first latched on to that opportunity were the pharmaceutical companies. Epocrates has traditionally made most of its money from those pharmaceutical company sponsorships, whereas obviously, AthenaHealth has a different business model. So I’m wondering how those two things go together.
Cosinuke: You’re right. Athena has historically made its money on a fee for service basis to providers, from physicians and practices all the way up to the nation’s largest hospital chains. And we’ve not made a business model around attracting revenues from pharma.
But in this case, Epocrates represents the explosion of viral usage among physicians at the point of encounter, in the exam room. And that’s exactly where pharma wants to be.
Epocrates has the history of being able to educate physicians in a way that does shift and move prescribing habits.
And so yes, it grew virally with explosive growth and it’s very much used by pharma to take advantage of that point of encounter education experience.
We see that as an opportunity to maintain that trust. Over time we may also look at other types of order sets beyond drug prescription and drug lookup needs. These other order sets include imaging and other diagnostics for which we might provide the same level of lookup services. We could also possibly extend the sponsor bench.
So we don’t see as an issue that it’s a different business model, because ultimately it’s an incredibly well loved service that’s being provided.
Williams: Analysts have described this deal in terms similar to what you’re describing although I’ve never heard anybody else use the term “love halo.” That’s a new one to me, but it’s a good one.
I generally understand the concept of adding a channel to expand the distribution to physicians. But can you explain specifically how things will be different for a physician using Epocrates post-Athena acquisition ? And in particular, how might this provide a physician with more exposure to the other Athena products that are available?
Cosinuke: We’re going to take a page out of their own playbook. Epocrates has a truly rigorous separation of church and state. Their med/pharma team is a team of real professionals, largely physicians or other health care providers by background.
The content creators understand how to “epocratize” content to make it highly accessible through the mobile channel, through the iPhone, etc.
And they really do separate what they allow the sponsors to provide from that content and they also ensure that what the sponsors provide is of equal value.
So there is a very rigorous hurdle that a pharma sponsor needs to get over, to make sure that what’s provided is a deep information service to the physician.
Essentially, pharmas get to compete equally on the content front with the med/pharma team for it to be a viable alternative and keep that love halo strong.
Athena –with its model of one instance of software– is collecting data and insight about the highest performing medical practices in the country and the highest performing physicians in the country. This includes care outcomes as well as financial revenue and profit gains.
We see that there’s an opportunity to provide really high value content on the core application around the business of health care. For example, there’s already a little widget on Epocrates that helps physicians look up CPT codes and the value of a particular procedure.
We have, through our database, the ability to look that up by specialty and even down to the zip code level. As the network expands that content becomes richer and even more available.
So there are several possibilities around Meaningful Use and around the evolving requirements for best practices. We’ve got rich content that flows out of our database of users and we can begin to work with the Epocrates content team to understand how to make it well loved by physicians as well.
We will be playing using the same standards that Epocrates has. We have to have high integrity content applications that we can provide physicians around the business of managing their practice.
Williams: Are there plans in place or could you envision them to strengthen some of the core Epocrates clinical content? I’m wondering, for example, whether Epocrates could be positioned to compete against other products. For example UpToDate is also loved and unlike with Epocrates physicians also pay hundreds of dollars a year for it. Are there opportunities to compete head to head with them or with other decision support tools on the clinical side?
Cosinuke:. We have almost 40,000 providers on the core network, and about 10,000 of them are on our EMR products. And we’re just beginning to see the tip of the iceberg of the value that we can create there. For example, Epocrates can offer value around its diagnostics support.
For example, a physician who is looking at a particular diagnosis might be looking up the medications to go with that, but might also want to know what other pediatricians in Pennsylvania prescribe at this point. We can identify, for example, the top three order sets that come out of this diagnosis from the Athena EMR.
It’s another type of content that we could pull out of our system and provide that enriches the clinical content within the core Epocrates application.
And what you’re also talking about is the difference between the less than a minute interaction with patients sitting adjacent to the physician and the more than five-minute interaction that the physician might go through either with the patient there or after work or between patients, which is more of a desktop and/or iPad type approach.
Epocrates is looking at and we will help them at competing. You talked about UpToDate, Medscape and others that have that integrated platform with a desktop application or the more than five-minute lookup.
So we’re going to look at that, but I will tell you that one of the things that Epocrates has done really well and one of the things that Athena has done really well is to stay truly focused on what it’s good at and its core mission.
So we will look at expanding and competing with UpToDate and the Medscape on the desktop, but only if it’s supremely compelling against that core mission.
Williams: I’ve heard your CEO Jonathan Bush talked about the concept of a national health information backbone that Athena is building and that pre-dates this deal, but is also being talked about in conjunction with the proposed acquisition of Epocrates.
Can you explain a little bit more about what a national health information backbone looks like from Athena’s perspective?
Cosinuke: Sure. It’s also our competitive strategy against big iron: the Epics and the Cerners and the big hospital systems. If you think about where the large software players are driving health information technology, it is not towards the same direction that, for instance, where financial services drove software.
In other words, health care does not operate the way ATMs operate. There’s really no reason why health care information can’t be delivered ubiquitously over the Internet using secure protocols.
So that’s what Athena is doing. It’s trying to say, “One patient, one record, in the cloud, open.” And that just because you’re a part of this health care system and you work under this thunder dome and you’re buying up these physicians doesn’t mean that that system actually can communicate with anyone else in the outside real world –say for instance, the CVS Pharmacy that is delivering all the flu shots in my town as opposed to primary care physicians. So we’re looking at the idea of open, of a highly interfaced, highly integrated network and we’re building up that capability.
The beauty of what Epocrates brings is immediate scale. Our service called Coordinator allows for the transmittal of a clean piece of highly structured health care information and allows for the receiver to actually pay for that clean piece of information. (This is based on an opinion from the OIG that we received last year.)
You could imagine that service being offered up on Epocrates and having half the physicians in the country have that tool like linked in at their fingertips. It gives us massive scale to truly springboard this open network concept on the health care provider community.
Williams: Rob, I know that corporate deals are based on availability of companies and specific opportunities. Obviously, you’re not thinking about Epocrates as sort of a quick hit and it’s not instantly going to be all merged in with the Athena product line.
How do you see this deal helping Athena evolve its strategy over time and what’s the vision of where it helps you get in five or ten years?
Cosinuke: We are looking at the strategy in three phases.
Phase one is to try to sidle up to the Epocrates brand and take advantage of some of the high levels of usage and deep love for Epocrates in the form of awareness gains for Athena. So phase one is sort of sneak up next to it, make ourselves known and be in that love halo.
Phase two is to invest in the core application of Epocrates. They spent a couple of years going down the road of trying to build their own EMR. And frankly, they were actually quite successful given the short period of time they worked at it.
I think the disconnect was the expectation that an EMR can be built in just a couple of years. I think anyone who’s in the EMR space understands it takes longer. We’ve been in an eight-year product life cycle to get it to a point where physicians actually love using it. And so on that front we’ll go back to the core application, its core benefit, its core functionality, the core use models.
And trust me, Epocrates folks have got a backlog of great ideas of how to enrich that application and add more value to physicians. So we’ll spend a good part of our next year, or year and a half, just fulfilling those wishes and investing in the core application to make it much better.
We’ll also look at ways in which we can expand its utility. This includes other types of lookups, other types of research that can be done and possibly adding the other ordering categories as well that provide value to its core reason for being used and loved.
And then finally, in phase three we’ll be beginning to look at integration. Epocrates is really the best used, best loved read-only application. And we can take that service of information and integrate it deeply into all of the appropriate places within AthenaNet.
You can imagine it sitting right within AthenaClinicals, it can be sitting right within our Coordinator capability and others.
But the reverse is also true. We like to think of Athena as being the industry’s best read and write application. We’ve got the power of deep stainless steel pipes, incredible interfacing capability, and world-class secure pipes that manage the transactions of health care.
So over time we will look at adding the transaction capability on to the Epocrates platform. This means looking up an order, placing the order, maybe even going into the medical record as part of receiving an order from a colleague in the space.
There are a myriad of ways in which we could use Epocrates truly integrated into our Coordinator service. We can manage the life cycle of our referral by making a mobile app that’s a content heavy and actually manages transactions between members of the care continuum in a community.
So that’s our approach: in phase one try to get some halo effect from awareness for Athena; phase two, deeply invest in its core application and use model, make physicians love it even more and expand the user base. And phase three is to integrate it into our transaction capabilities on that backbone network.
Williams: I’ve been speaking today with Rob Cosinuke. He’s SVP and Chief Marketing Officer at AthenaHealth. We’ve been talking about the proposed acquisition of Epocrates, what it will do for Athena in the near term and longer term.
Rob, thanks so much for your time today.
Cosinuke: Thank you. It’s a real pleasure.January 30, 2013