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Athenahealth: HR Due Diligence for Strategic Investment Decisions
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A thorough diligence assessment of a potential asset should include thorough analysis of its workforce, both through a snapshot view and mapping its changes over time. This enables a comprehensive understanding of workforce capabilities, by analyzing staffing levels across functions, seniority levels, and geographies. It may also highlight potential gaps or opportunities for optimization, especially when comparing with and benchmarking against peer companies. Potential buyers and investors, like private equity and venture capital firms, can then establish appropriate valuations and forward plan for strategic shifts upon deal closure.
On the other hand, workforce analysis can demonstrate how acquisitions or investments can shape a company’s workforce. By examining changes in the size and structure of a company’s workforce before, at, and after a change in ownership or funding round, we can draw insights and make inferences about the strategic priorities and shifts at these milestones.
Athenahealth: An acquisition example
Aura’s data enables this analysis through dashboards showing these key metrics across time points. In this example, we look at one of the largest healthcare acquisitions of last year: the US$17 billion purchase of Athenahealth by Hellman & Friedman and Bain Capital in February 2022. This healthcare technology company offers cloud-based software and services to healthcare providers, assisting them in streamlining administrative tasks, improving patient care coordination, and optimizing financial performance. It competes with a number of other multinational companies providing alternative products, including Epic Systems and Cerner (owned by Oracle).
Purchased in November 2018 by existing investor Elliott Investment Management and Veritas Capital with ~6,000 employees, Athenahealth had undergone significant restructuring at the behest of investors over 2017 to 2018 in order to generate cost & bureaucratic efficiencies and boost the bottom line, with close to 10% of its workforce being cut.
How did the overall workforce change over time?
We analyzed publicly available data on current & past Athenahealth employees – note that these figures may slightly underestimate the actual employee figures, as our outside-in data sources rely on online profiles being up-to-date and therefore may not have 100% coverage.
We see a significant period of workforce shrinkage over 2017 & 2018 in line with the media-announced layoffs. Since this period, however, Athenahealth has steadily grown its workforce even after the Hellman & Friedman and Bain Capital purchase in 2022, suggesting that growth may be the overarching strategic objective over the last few years. Over this entire period, we have also seen growth in Athenahealth’s APAC workforce, from around 13% of the workforce in 2017 to around 25% at the time of the 2022 acquisition, perhaps suggesting an increased focus on offshoring or slight shift in customer focus towards APAC clients. However, since the 2022 acquisition, this has remained stable, implying that a good balance has been reached.
Functional analysis shows a commitment to product despite the need for cost-cutting
Using a functional lens to investigate the workforce composition allows greater clarity on which departments were affected more during the initial restructuring, and which departments have seen the greatest growth since.
Between July 2017 and January 2019, where Athenahealth’s total workforce shrank by ~10%, we saw net reductions in size for the clear majority of departments, especially Operations (-~1.5ppt), Customer (-~1ppt), and Marketing (-~1ppt) functions. Meanwhile, the Product team was the only team to grow in absolute employee numbers (+~1.5ppt), while the shares of the Engineering (+~1ppt) and Sales (+~1ppt) functions rose in relation to the smaller workforce. From these shifts, we can infer a tactical focus on product development and closing sales, while slimming down top-of-the-funnel marketing expenditures and internal operations processes. This balance between strategic growth and cost optimization could position the company for long-term success.
Comparing these shifts with the workforce today, we see many of these overall trends continuing, despite the workforce experiencing significant overall growth over this period. Significant investments in Engineering (further +~5ppt) and Sales (further +~2ppt) teams, paired with ongoing relative reductions in Operations (further -~2ppt) and Customer (further ~-1ppt) departments, suggest that this overall strategy has been maintained even through the 2022 acquisition, in preference to a complete overhaul of the direction of workforce planning. Interestingly, however, non-core functions like HR & other support functions have not shrunk at pace with Operations teams, yet are common hunting grounds for personnel efficiencies and offshoring.
Top-level management slimmed, but opportunity for further spans restructuring
Another common approach to workforce restructuring is analysis and reduction of management layers, in order to reduce personnel costs and unnecessary bureaucratic processes exacerbated by complex structures. In our spans & layers analysis, we break down the workforce into four main layers of seniority (junior staff, managers, directors/VPs, C-suite/top level management), and look at the number of ‘FTEs per manager’ between each layer to see which layers are overweight or underweight.
Over the period between the 2017 and now, top management has been slimmed down significantly, from ~8 directors/VPs per top level manager to ~13. This is indicative of a concerted effort to trim an overweight and expensive top management layer in order to reduce costs. However, there have been minimal changes to lower and middle management layers – at around 2 FTEs per manager, this may represent an opportunity for further optimization in future restructuring.
This simple quantitative analysis of workforce trends across key milestones in a company’s evolution can generate useful insights in partnership with other figures and qualitative signals. As part of a wider diligence process, this can support private equity & venture capital firms to assess the alignment of the workforce with the company’s objectives and identify any gaps or optimization opportunities.
In the case of Athenahealth, we see significant restructuring shifts prior to the 2018 acquisition, with optimization of internal operations & top-level management and investment into product-related teams. However, since this acquisition and the subsequent purchase in 2022 by Hellman & Friedman and Bain Capital, the workforce has grown substantially, but clearly maintaining these strategic objectives.
At Aura, we support this type of analysis by making workforce data readily available, enabling comparison of relevant metrics between cohorts of companies to develop a deeper understanding of workforce trends and drive meaningful change.
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Matthew Chan
Product Economist, Aura

Note: All information mentioned in this report comes from publicly available data; if you believe the information on your company is incorrect, please reach out to us at:
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Athenahealth: A Workforce Diligence View
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