Seeking Alpha
Profile| Send Message|
( followers)

It is estimated that the healthcare reform bill that was released by the Congressional Budget Office will amount to $600 billion within a span of 10 years. If studies are correct that approximately 30% of dollar spent on healthcare is spent on diagnostics and testing, then the opportunity for an enormous cost reduction is definitely an attractive proposition not only for doctors, patients, and insurers, but also for the government who is planning to overhaul the system.

But the ultimate benefit will be to the American patient, which is why reforms are being pushed. I believe that essential to having good care is having complete and accurate information. At present, only 20% of doctors use computerized healthcare information. This means that these doctors have uploaded their patients' data on paper into the digital network that in any case one of these patients gets into an accident and health history needs to be accessed, then it will be just by entering his or her driver's license number. Many of these doctors who've bought into the system does not even know how to maximize its use. Getting into the system does not only require relearning effort but also is expensive for the doctors too that is why yet only a few are participating.

Benefits of healthcare information technology adoption:

  1. Access to medical records will be faster and cheaper for the healthcare provider.
  2. Complete and accurate health record of the patient.
  3. More efficient delivery of care.
  4. Can decrease time spent on administrative duties and increase time spent on direct patient care.
  5. Enhance clinical decision making process.

Megatrend Drivers:

  1. Obama administration proposing $50 billion for the Healthcare IT adoption.
  2. Government incentives for action in implementing an electronic medical record (EMR) system and penalties for non-action.
  3. 3) Out of 800,000 clinicians in the US, only 17% use nationally recognized electronic health record system.
  4. Reimbursement systems like Medicaid and Medicare and other insurance and healthcare providers are now requiring healthcare IT adoption from physicians and hospitals.
  5. Healthcare IT adoption outside the US is expected to increase too as standard of living goes up along with the need for better healthcare services.

Focus:

Estimates indicate that up to 80% of healthcare is delivered by small scale practices. These practices usually are made up of 1 to 5 physicians. Thus, expect that the bulk of the healthcare IT adoption funding to be given to rural hospitals and small scale physician practices. And because big players will somehow be disinterested in this fragmented market, their role is to consolidate those small players serving this market. Expect these big companies to acquire small players if they want to participate in the small practices market.

List:

  • Computer Program and System (NASDAQ:CPSI) - Small to medium market
  • Eclipsys (ECLP) - Small to large market
  • Cerner Corp. (NASDAQ:CERN) - Large market
  • Allscripts Healthcare Solutions (NASDAQ:MDRX) - Large market
  • Quality Systems (NASDAQ:QSII) - Small to medium market

Disclosure: Bryan Gomez does not own any of the stocks mentioned in the article.

Source: Five Healthcare Information Technology Drivers