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1,900 new jobs, $9.5m tax break for Athenahealth

Health data firm, state strike deal

Athenahealth has promised to add workers at its Watertown headquarters in exchange for the state tax break.

Pat Greenhouse/Globe Staff/File 2009

Athenahealth has promised to add workers at its Watertown headquarters in exchange for the state tax break.

Athenahealth Inc., one of the companies leading efforts to computerize health care records across the country, has promised to add 1,900 workers at its Watertown headquarters in exchange for a state tax break, the biggest economic development deal reached with Massachusetts in years.

The electronic medical records company, which already has nearly 1,100 employees in Watertown, pledged to nearly triple that by 2022 in exchange for $9.5 million in state tax credits under a tentative deal worked out with Massachusetts economic development officials. The state Economic Assistance Coordinating Council is expected to formally sign off on the tax break at its meeting on Wednesday.

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“This is a very important project for the state,” said James A. Ermilio, director of the Massachusetts Office of Business Development. He said athenahealth is not only promising to create an impressive number of jobs in Massachusetts but can help anchor a key growth sector for the state’s economy. “To find a company like athenahealth that is willing to grow here is a great story.”

The deal is particularly significant because although Massachusetts’ jobless rate is below the nation’s, unemployment remains a problem. The state’s rate rose to 6.6 percent last month.

Athenahealth also promised it would create quality jobs, including for software developers, marketing professionals, claims processors, and account managers — jobs Ermilio worried might go elsewhere if not for the state tax incentives.

To make room for new workers, athenahealth recently agreed to buy the Arsenal on the Charles office complex in Watertown from Harvard University for $168.5 million. The company currently occupies less than half of the 760,000-square-foot campus but plans to gradually use more space. It also pledged to spend another $89 million on renovations, construction, furnishings, and equipment at the site as part of the tax-incentive deal.

The deal underscores athenahealth’s explosive growth plans as hospitals and medical centers make a major push to move records online, with support from state and US officials.

‘This sounds like a case where a company is getting paid for what it was doing anyway.’

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The company, one of the country’s largest makers of software to manage health care records and billing, has boosted its revenue by an average of 30 percent a year since it was founded in 1997 by Todd Park and Jonathan Bush, a first cousin of George W. Bush, the former president.

The deal would create more jobs than all but three other deals done under the state’s flagship incentive program, created two decades ago. The three others are Sun Microsystems (which promised to create 3,100 jobs in Burlington in 1997), Cisco Systems Inc. (which pledged to add 2,900 jobs in Boxborough in 2000), and Staples Inc. (which promised to create 2,215 jobs in Framingham in 1997).

But not all such deals wind up creating all the jobs originally envisioned. Both Sun and Cisco struggled after the tech-bubble bust in 2000, for instance, and were not able to fully deliver on their promises. And some critics question whether the subsidies are necessary to attract jobs.

“This sounds like a case where a company is getting paid for what it was doing anyway,” said Greg LeRoy, executive director of Good Jobs First, a Washington group that tracks development incentives.

The athenahealth incentive works out to $5,000 per job, less than some other incentives the state has awarded. Under state guidelines, the state can offer companies up to $30,000 per job for the most important projects. And in 2010, the state and the City of Boston combined to offer Liberty Mutual $46.5 million in tax breaks (or $77,500 per job) to help the insurance giant build a skyscraper near its Back Bay headquarters.

Athenahealth is moving into new areas nationwide. In January, the company inked a $293 million deal to buy Epocrates Inc., a San Mateo, Calif., provider of drug information via mobile devices. It has also added analytical tools to help physicians identify gaps in patient screenings.

“I think their growth plans are realistic,” said Judy Hanover, research director at IDC Health Insights in Framingham, a market research firm. “All of health information technology is growing, and athena is getting into some of the fastest-growing areas, so they’re well positioned.”

Athenahealth, which employs 2,600 worldwide, said it is also adding jobs in Maine, New Jersey, Georgia, Alabama, Texas, California, and India. It announced plans on Monday to lease additional office space in Atlanta and create 500 jobs there over the next five years.

“We’re growing in Massachusetts, and growing everywhere,’’ said Dan Haley, vice president for government and regulatory affairs. Haley said Massachusetts is moving to give the company tax incentives to help offset the high cost of doing business here and make sure it continues to “focus growth here in Massachusetts.”

Athenahealth has not asked the Town of Watertown for a property tax break, something many companies request to supplement state tax credits.

The deal will probably make athenahealth the largest private employer in Watertown.

“Obviously, having someone make this kind of investment in the town, both in terms of dollars and jobs, is a good thing,” said Steve Magoon, Watertown’s director of community development and planning.

Athenahealth plans to unveil a master plan for the 29-acre Arsenal property in coming months that will include more community amenities, said Haley, the firm’s vice president. The complex, originally used to build cannons for Navy ships in 1816, includes office space, restaurants, and a theater.

“Very honestly, we have big plans for this campus and want to turn it into a bigger part of Watertown,” he said. “Our CEO, Jonathan Bush, feels very strongly that he wants the property to feel like it’s a place where our employees can live, work, and play.”

Todd Wallack can be reached at twallack@globe.com. Follow him on Twitter @twallack. Robert Weisman can be reached at weisman@globe.com. Follow him on Twitter @GlobeRobW.
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