Do Privately-Owned EMR Vendors Offer Better Customer Care?

When a company like Greenway Medical Technologies (NASDAQ: GWAY) goes public, most of the post-IPO talk centers on what its leaders will do with the money.

Ideally, the newly-rich EMR vendor will do customer-friendly stuff like improving their product and strengthening their technical support organization. In reality, though, public companies have a different focus; their job is keeping the Wall Street folks who own their shares happy.

Since happy largely means only one thing — increasing profits and earnings per share — that vendor isn’t likely to take on new expenses. No, it’s more likely to find ways to charge more and sell more, rather than doing a better job of showing love to its existing customers.

SRSsoft’s Evan Steele has shared a nice analysis of  how KLAS customer support ratings (for companies serving the 6 to 25 physician practice) compare with the vendor’s financial status.  While they’re not exactly scientific, Steele’s conclusions are still striking; he concludes that five of the top six vendors are privately owned.

Now, I’m not sure how that correlates with another KLAS data point, in which publicly-held EMR/practice management vendor athenahealth (NASDAQ: ATHN) was named as top-ranked provider for its cloud-based EHR in December. Its stock has also been on a generally upward climb for the past 12 months, ranging from $39.87 to $72.70 per share.

Is it possible athena is managing to please both its customers and its investors? Well, if the typically nasty gossip you see on athena’s discussion board is any indication, no. It looks like grouchy insiders are shorting the stock, which some expect to plunge below its starting price to $30/share or so fairly soon.

That being said, one particularly intriguing comment suggests that Cerner (NASDAQ: CERN) is eyeballing athena, which observers think would be a good fit.

Cerner fits the profile I’ve outlined: it’s huge, profitable and what’s more, in need of a product to fill the physician niche it doesn’t own. If you think Cerner could just build its own physician presence, look at GE’s decision to drop doctor-oriented Centricity Advance. Clearly getting doctors to buy was  much harder than it looked at first glance.

Cerner doesn’t need athena to build its margins: analysts expect it to see sales growth of 13+ percent this year, to $2.5 billion or so. It should also see earnings growth of 22+ percent to $2.25 per share.

Buying athena would give Cerner a critical medical practice presence, and at the same time, let athena keep its customers happy without forcing it to play only for a Wall Street audience. In this situation, at least, maybe an EMR vendor can have its cash and eat it too.