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athenahealth Layoffs Impact 500 Employees in Attempt to Cut Costs

Shareholders were told athenahealth layoffs would affect about 9 percent of the organization’s total workforce.

athenahealth EHR

Source: Thinkstock

By Kate Monica

- athenahealth is eliminating around 500 of its 5,600 employees as part of a plan to cut costs under pressure from an activist investor, according to a report in The Boston Globe. The athenahealth layoffs affected about 9 percent of its workforce, the health IT company said, but did not specify how many employees would be cut from its largest campus in Watertown, Massachusetts.

In addition to the layoffs at its Watertown office, athenahealth also closed two offices in San Francisco, California and Princeton, New Jersey. The company also has locations in Belfast, Maine; Austin, Texas; Atlanta, Georgia, and India.

athenahealth CEO Jonathan Bush stated in a conference call with investors and analysts on Friday morning that the layoffs were aimed at redundant positions and middle management. He also expressed concern about how the workforce would handle the job cuts.

“My concern in this process was one of cultural impact,” Bush said during the call. “Would this demoralize? Would this demotivate? Or would this inspire? And I am extremely pleased and confident that the answer is the latter.”

“We have an extraordinary collection of colleagues that are in this for the mission, and they want that mission even at the expense of hard decisions.”

In August, the health IT company had stated it intended to slash expenses by at least $100 million. Until the shareholder conference call yesterday, athenahealth officials had not disclosed how the company intended to reduce expenses.

athenahealth’s net income was $13 million for the third quarter of fiscal year (FY) 2017, down $13 million from this time last year. Company officials stated it “remains committed to significantly increasing operating margins in 2018.”

Yesterday, athenahealth announced a period of continued growth and stated its EHR users—especially those in the community hospital market—reported average financial gains of 5 percent over baseline.

The athenahealth network currently includes 106,000 providers and 102 million patients. The health IT company’s EHR solutions are currently in use at 56 community, rural, and critical access hospitals.

“One in three rural hospitals is at financial risk, which says to me they need a partner to help them scale innovation as well as eliminate underperforming processes and traditional software tools,” said athenahealth Chief Product Officer Kyle Armbrester. “Earlier this year, KLAS reported athenahealth as the primary leader in terms of net gains in the community hospital market.”

athenahealth also expanded its Guarantee Program to include Stage 3 Meaningful Use requirements for eligible hospitals in May of 2017. athenahealth also offers a federal incentive support program for the Merit-Based Incentive Payment System (MIPS) under MACRA. 

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