Five months since its acquisition by Veritas Capital, athenahealth is now laying off employees as it continues the merger with Virence Health Technologies that was part of the private equity deal.
WHY IT MATTERS
The $5.7 billion acquisition by Veritas and Evergreen Coast Capital (a subsidiary of Elliott Management, which had aggressively pursued changes from athenahealth management as an activist investor) was announced this past November and closed in February.
It called for Watertown, Massachusetts-based athenahealth to merge with Virence, a Seattle-based spinoff from GE Healthcare focused on enablement of value-based care.
As that merger continues, athenahealth is now reducing its own workforce – estimated to be around 5,000 employees – by what the company said was less than 4 percent in order to streamline and consolidate its operations under the new ownership.
It’s not clear exactly where those people work or in what capacity, but reports in the Boston media suggest many of them will be at athenahealth’s Watertown headquarters. And an article in the Bangor Daily News indicated that “at least dozens – and perhaps more” positions will be eliminated at the company’s 900-employee Belfast, Maine, campus, where it is one of the biggest employers in the area.
THE LARGER TREND
This is not the first time in recent years that athenahealth has made layoffs, nor is it the largest reduction in its workforce. In 2017, then-CEO Jonathan Bush announced the company would eliminate nearly 500 jobs – 9 percent of its employee base – as part of a series of belt-tightening moves (including closing some offices and selling off its corporate jet) designed to placate Elliott Management by being “more nimble and efficient.”
It wasn’t enough, as Elliott continued to play hardball; in June 2018, Bush stepped down from the company he’d co-founded, and the sale to Veritas occurred four months later.
Bush had called the 2017 layoffs a “one-time only exercise.” Even though they weren’t, perhaps this newest round will have a different result, positioning the company for new growth and stability after two years of upheaval.
ON THE RECORD
An athenahealth spokesperson did not respond to a request for comment from Healthcare IT News, but the company had earlier supplied a written statement to the Boston Herald.
“We recently launched the transformation of our business and are reorganizing our resources as we integrate athenahealth and Virence Health into a single company with a sharpened strategic focus and unified sense of purpose and direction,” it said.
“As with any large transaction of this size, there are overlaps in functional areas,” according to the statement. “While we’ve had to make some difficult decisions, we have implemented a new organizational model that enables faster decision making, decreases bureaucracy and consolidates capabilities so we can best deliver value to the 160,000 providers on our network.”
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