Stimulus Plan Should Give a Shot in the Arm to Health IT

The accompanying table below presents statistics and the top five rated companies in the ETF Innovators Global Health Information Technology (Health IT) Index, which is structured to include companies with market caps between $50M - $10B. The rating system is based on a formula which considers each company's market cap weighting, net income weighting, and historical stock price returns and the index is equally-weighted among all 52 companies, which is dominated by small-caps with an average market cap of $558M.

As a new ETF idea, the Top 30 Rated stocks would be chosen as active components and rebalanced each quarter on a semi-active basis. Over the past year, the Health IT Index has outpaced its benchmark ETFs, including Vanguard IT (VGT), Healthcare Sector SPDR (XLV), and Technology Sector SPDR (XLK).

The top five rated companies include Swiss telemedicine firm Card Guard (CDGUF.PK) – a provider of remote patient monitoring systems, Merge Healthcare (MRGE) – a clinical and medical imaging information software developer, Quality Systems (QSII), maker of NextGen electronic medical records system, SXC Health Solutions (SXCI), a provider of pharmacy benefit management and transaction systems, and CardiNet (BEAT), a provider real-time, outpatient heart rhythm monitoring.

Cerner (CERN) and Allscripts-Misys (MDRX) are two more companies included in the top 30 rated stocks as integrated Health IT plays on electronic prescribing (e-prescribing), medical records, and health information systems. The entire Health IT space is poised to benefit from an expected multi-billion dollar investment (likely around $20B) as part of an overall $800B stimulus plan.

However, the expected benefit for Health IT companies may not materialize until 2010 as it will take some time for the expected government grants to encourage purchases of new technology by hospitals and clinics. Also, prescribers are encouraged to adopt e-prescribing in the form of longer term financial incentives through Medicare reimbursement and will be penalized if they do not adopt the technology by 2012.

[click to enlarge]

Comments

[Dan Jacome:]

That is correct, it will take 12-18 months for the companies to see this $. Note also that the House/Senate versions of bill look different, as one is for $23B and the other for $20B, I think...There was something in the WSJ Saturday that noted this discrepancy

Jan 25 01:55 PM

[healthyinve...:]

I think QDHC - Quadramed represents the best risk/reward oppty in this space -


On Jan 25 01:55 PM Dan Jacome wrote:

> That is correct, it will take 12-18 months for the companies to see
> this $. Note also that the House/Senate versions of bill look different,
> as one is for $23B and the other for $20B, I think...There was something
> in the WSJ Saturday that noted this discrepancy

Jan 26 03:54 PM

[mhg2:]

The Obama government is going to collect all the medical data on every american and instruct physicians how to practice medicine. Are you kidding! This is the greatest infringement on privacy yet. Now our inept bloated big brother is watching you and controlling you government is going to practice medicine? And people there is no opt-out. This is not some minor IT project proposed. This is a draconian control of all American's private information and the government taking complete and direct control of our medical industry. Danger, danger, danger, danger. Things not only can get worse, they can get much worse.
For more reading google "medicine stimulus plan" and see what this plan contains. According to Bloomberg.com 2/10/09 the budget for this part of the bill is greater than the combined millitary budget for the Navy, Army, Marines and Air force combiined.

Feb 11 02:54 AM

[dukejupiter:]

You coutld not possible have read any of the measures yourself. This is only stimulus for physicians and health systems to practice medicine using modern tools they will buy and manage themselves. The only government control in the bill is that the systems have to talk to each other. Get a grip man.


On Feb 11 02:54 AM User 326626 wrote:

> The Obama government is going to collect all the medical data on
> every american and instruct physicians how to practice medicine.
> Are you kidding! This is the greatest infringement on privacy yet.
> Now our inept bloated big brother is watching you and controlling
> you government is going to practice medicine? And people there is
> no opt-out. This is not some minor IT project proposed. This is a
> draconian control of all American's private information and the government
> taking complete and direct control of our medical industry. Danger,
> danger, danger, danger. Things not only can get worse, they can get
> much worse.
> For more reading google "medicine stimulus plan" and see what this
> plan contains. According to Bloomberg.com 2/10/09 the budget for
> this part of the bill is greater than the combined millitary budget
> for the Navy, Army, Marines and Air force combiined.

Feb 15 12:39 PM