athenahealth, Inc., a  provider of cloud-based practice management, electronic health record (EHR), and care coordination services, today announced that it has signed a definitive agreement to acquire Healthcare Data Services LLC (HDS), a web-based solutions provider and expert in health care data analysis and population health management for payers and providers. It is anticipated that the transaction will close in October 2012.

This acquisition is expected to expand athenahealth’s cloud-based services portfolio to include high-value, population-based cost and quality data analysis and reporting capabilities. By expanding its services in this way, athenahealth will be strengthening its ability to support health care organizations to navigate the growing number of risk-based payment models, and align care coordination with patient population needs.

“Value-based payment models are fundamentally changing the way patient care is coordinated, delivered, and reimbursed,” said Jonathan Bush, CEO and chairman of athenahealth. “With HDS, we can help health care organizations to thrive in the face of change—to drive down costs through smart, high quality care coordination and to understand the totality of services being provided. This acquisition supports our existing efforts to create an information backbone that makes health care work as it should.”

New payment models offered by the U.S. government and commercial health plans aim to create a reimbursement system that links care reimbursement to the quality of care delivered and, ultimately, to reduce overall health care expenses for populations of patients. These risk-based contracts come in a variety of models, including pay-for-performance (P4P) incentives, bundled payments, shared savings, and global capitation; each requires improved insight into patient population data so that health care organizations can gauge and manage patient needs while simultaneously tracking and adjusting their own performance against risk-based reimbursement contracts.

The addition of HDS would bring many advantages and synergies that would expand athenahealth’s recognition as a single-source provider of best-in-class workflow and data insight solutions to support all payment models:

• Proven Innovation Excellence – HDS has led the market for population
  health tools in Massachusetts, which in turn has led the country in
  transforming toward more of an accountable care health care
  marketplace. Together, the combined organization would be able to help
  a broader set of health care organizations to drive quality and
  improvement to the way care is coordinated and reimbursed.
• Key and Differentiating Services – The proven services and value of
  HDS would be able to leverage athenahealth’s investment, sales force
  capacity, and complementary cloud-based services. HDS complements
  athenahealth’s commitment to support risk-based payment models, as
  well as athenahealth’s mission to be the best in the world at getting
  medical caregivers paid for doing the right thing.
• Advancement to Health Information Open Exchange – With HDS,
  athenahealth could better support health care organizations in their
  access and use of data as a means to drive clinical and financial
  improvement. HDS complements athenahealth’s clinical-cycle,
  patient-cycle, and care coordination workflows, as well as
  athenahealth’s efforts to create a health care information backbone to
  make health care work as it should.
• Accelerated Growth within the Large-to-Enterprise Market – HDS brings
  valuable relationships within the medium-to-large health systems
  market. Greater access to these organizations would accelerate
  athenahealth’s delivery of its cloud-based services and in turn
  contribute to growing revenue streams.

“By combining HDS with athenahealth, we expect to create a comprehensive, easy-to-access platform for health care organizations to take on and succeed in the face of payment reform and the shift to accountable care,” said Jonathan Porter, co-founder of HDS. “The massive changes going on in health care reimbursement create challenges, but more so create opportunities. Together with athenahealth, we would be able to bridge the gap between providers, payers, and patients by providing ready-to-use population health management capabilities as part of EHR workflows that support restructured payment models and ensure the delivery of appropriate and necessary care to patients.”