Athenahealth Acquires RazorInsights

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RazorInsights, a cloud-based EHR vendor working in the small and medium size hospital market, announces that it has been acquired by Athenahealth for a rumored $40 million in cash. RazorInsights launched in 2010, raising a $350,000 seed round that it used to code, pilot, and launch an entire EHR system. In 2013, after having installed several hospitals successfully, the company went back to investors and scooped up an additional $11 million Series A. Since then, it has contracted with more than 20 small hospitals throughout the country.

Now, Athena will absorb RazorInsight’s cloud-based technology, incorporating their inpatient workflows into its own AthenaClinicals EHR, and expanding Athena’s business into the inpatient setting for the first time. RazorInsight’s 25-employee team will move from their headquarters in Kennesaw, GA to Athena’s offices 30 minutes away in Atlanta.

While the “cloud” has been a buzz word for years, the reasons that cloud-based solutions are appealing to customers are often misunderstood. Cloud-based systems tend to require less upfront capital to implement. For a hospital buying a new EHR, upfront costs are significant. Beyond license and implementation fees, hardware costs can quickly run into the millions, and those costs are all incurred upfront. Cloud-based vendors are able to capitalize on this by absorbing the cost of hardware as an operational expense, and spreading it out over the life of the contract, resulting in lower upfront costs, and subsequently a lower risk project for the customer. Cloud-based vendors are also assuming the responsibility of hiring and training hardware engineers, which means less FTEs for the hospital to pay, translating into even more potential cost savings.

Athena certainly has its work cut out for it, between interfacing its new and existing systems together, and then enhancing the overall RazorInsights EHR platform to compete beyond the small market. However, the acquisition is a compelling milestone in the story of cloud-based technology in healthcare. We’ll see if Athena is able to do better with its newest acquisition than it did with its last, Epocrates, which after a $293 million purchase price, has yet to deliver meaningful returns for Athena.


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