Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Software Development Brings Healthcare Outsourcing To Growth

|Includes: Accenture plc (ACN), GE

By: Jamee C.

Various fields in outsourcing remain in the spotlight with the recent developments in the outsourcing industry showing that fields such as finance and customer relations are at the forefront. But while this is true, it is speculated that upon the passing of the healthcare reform in the United States, it will be outsourcing companies, particularly those in the field of healthcare outsourcing such as companies in medical billing services and software companies in the medical field who will reap the benefits from it. Healthcare Packaging reported that despite a slow movement in the healthcare industry in 2010, the new healthcare legislation will be able to push the industry’s growth to exceed the previous records of growth.

Recently, Kalorama Information, a market research firm that specializes in the medical field, released a statement that revolves around the idea that companies manufacturing medical supplies and software are already looking to outsource its manufacturing processes. It was reported that since there will be a 2.3% excise tax on the revenues of these companies; they will now be more open to the notion that outsourcing will be able to help them lower their overhead costs. The tax, which will be implemented two years from now, will likely push some companies to venture into the outsourcing market to see what is available to them.

According to Bruce Carlson, Publisher of Kalorama Information, “The tax itself won't force a firm to outsource, but since the law taxes revenues notwithstanding the cost of manufacture -- it could add further pressure to bring costs down in order to restore profits.”

Nagarro Inc., a software development company, issued a statement that the company has seen a remarkable increase in their clients’ spending in the past year, especially with the large enterprise companies they are currently servicing. One of the industries that have sought the services of Nagarro Inc. is the healthcare industry and it does look promising that the healthcare industry will push for more outsourcing businesses like these now that companies are spending more.

On further healthcare outsourcing recent expansions, Accenture (NYSE:ACN) has entered into a two-year contract with the Office of the National Coordinator for Health IT (ONC) of the United States government to provide services on the development and management of data and use cases, mainly patient-related pieces of information, that are used across the healthcare system. Electronic medical records (EMRs) have been widely used in the healthcare system and with this recent deal by Accenture, the Dublin-based company will somewhat incorporate the use of EMRs with government processes. This procedure will be able to document the standards that are necessary for healthcare operations.

Another company reflecting the growth potential of the healthcare industry is GE Healthcare, a subsidiary of General Electric (NYSE:GE) that offers medical software technologies. During the last few days of January 2011, GE Healthcare released its quarterly report and it is definitely positioned at a stronger standing, with an 8% increase in revenue, compared to that of 2009’s.

If the industry would continue pushing for developments like these, it looks like the healthcare industry is poised for a healthy future.



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.