eClinicalWorks Tops $100M Sales as Doctors Move from Paper to Pixel Records
Most health records in the U.S. today are still gathering dust, tucked away in filing cabinets, existing only on paper. Even though the idea of electronic medical records is still a relatively new concept at most hospitals and clinics, the EMR software industry has its share of dinosaurs living alongside the newer species. At eClinicalWorks, one of the new generation electronic medical record companies, business is thriving even as it fights some much larger and older competitors who are pursuing the same customers.
The Westborough, MA-based company experienced eight-figure revenue growth for its sixth consecutive year, with annual revenue of an estimated $105-$106 million in 2009, up from $85 million in 2008, according to the firm. (The company is privately held, and doesn’t reveal full financial data, like what its profits are.) After nearly 11 years in business, the firm has grown to 930 employees and now has operations Pleasanton, CA, New York City, Alpharetta, GA, as well as here in Massachusetts.
To a certain extent, eClinicalWorks is riding a wave of demand for electronic medical records. (One of the firm’s counterparts, Horsham, PA-based NextGen Healthcare Information Systems, reported a similar rate of revenue growth during the last nine months of 2009.) The federal stimulus package passed last February set aside $17 billion in incentives for doctors who adopt electronic records, and physicians are eligible for as much as $44,000 in Medicare incentives starting in 2011 for implementing the records systems in their practices. That eClinicalWorks was growing rapidly before the government announced the plan bodes well for the future. But the company co-founder and CEO Girish Navani is not relying on federal dollars to exclusively pave the way for the firm’s future prosperity.
The company has made investments in distinguishing itself among the field of EMR providers, including the industry giants such as Allscripts (NASDAQ:MDRX), General Electric (NYSE:GE) , and McKesson (NYSE:MCK). Navani told me that his firm’s electronic records and practice management software are user friendly, easy to customize, and provided with comprehensive technical support. The company also charges 30 percent to 50 percent less for its EMR software than its competitors charge for theirs, the CEO says.
A key factor in the firm’s growth is the ability to provide its software to healthcare providers over the Internet. The company’s software-as-a-service (SaaS) applications are becoming increasingly popular among doctors, in part because they don’t require physicians to invest as much in hosting the software on their own servers. Instead, eClinicalWorks has eight regional data centers around the country that support the Web-based software. And while three-fourths of the company’s total of 34,000 physician customers are using the version of its software that comes on discs and needs to be installed on their hard drives, Navani says, the rest who are using the Web-based iteration represent a significant number of SaaS users in the EMR industry.
By Navani’s calculations, his company is the largest provider of Web-based electronic medical records. (This statistic is difficult to calculate due to lack of information from the firm’s competitors.) While many major EMR providers don’t have a SaaS option for their customers, Navani says, he expects that within three years half of his company’s customers will be using its Web-based software. (Indeed, this recent post from The Health Care Blog talks about how Todd Park, the chief technology officer of the U.S. Department of Health and Human Services, is advocating for the use of the Internet to share medical records and healthcare information.)
“I think you will see a much faster rate of growth in SaaS [EMRs] over time,” Navani says. “It’s already happening, especially as broadband is further distributed to more doctors offices.”
Yet eClinicalWorks isn’t the only EMR provider in town that is embracing the Internet. Watertown, MA-based Athenahealth (NASDAQ:ATHN) is making some inroads with its own network-based electronic medical records system. Athena, which launched the EMR in late 2007, had a comparatively few 1,270 physicians using the product as of the third quarter of 2009. But Athena recently elbowed in on one of eClinicalWorks’s big accounts, Caritas Christi Health Care. Boston-based Caritas Christi, the largest network of community hospitals in New England, said in a joint statement with Athenahealth last month that it selected the firm’s electronic record system for its network of 500 physicians and would offer the system to its affiliated network of 1,200 doctors.
Navani says that he is unconcerned about the Caritas Christi-Athenahealth announcement, and that Athenahealth’s electronic record is being offered as an option to doctors who are already using eClinicalWorks.
“We don’t worry about Athenahealth as an EMR company,” he said, noting that Athena is known more for its software service for managing billing and revenue life cycle than its electronic medical records. “We’re focused on what we do well, and we don’t see them often.”
One of the things that eClinicalWorks has done well is sustain its growth and its own corporate culture. It’s well chronicled that Navani, who is one of five co-founders of the company, is steadfast about the firm continuing to expand as a private outfit rather than seeking outside investment or an initial public offering to fuel growth. Also, he said that the firm’s private status enables it to make long-term investments without worrying about how the numbers look in regular quarterly and annual financial reports. For example, he says that the firm paid $2 million to buy its office in the San Francisco Bay Area last year rather than leasing the property, something that costs more upfront yet he believes will save money over a 10-year period.
The company has some ambitious goals. Navani says that the firm wants to increase the number of physicians that use its software from more than 34,000 today to 100,000 within the next seven years. The company is adding 1,000 new physicians every month, he says, so the firm just may reach that goal within that period of time.
“We are at the end of the day a company that wants to be around for the long term,” Navani says. “We make investments with a long-term focus.”