With the certainty of American Recovery and Reinvestment Act stimulus dollars increasing demand for health care IT products, the biggest question mark currently facing the industry is how will management teams ride out the rising tide that lifts all boats?
“Half of the game is the demand itself, and nurturing and driving sales. And the other half of the game is preparing the infrastructure and organization to deal with that demand,” said Leo Carpio, senior analyst at Caris & Company.
Now that the industry’s former hockey-stick growth scenario has pared down to a more somber and tempered ramp-up, health care IT management teams must walk a fine line between building up capacity and investor expectations, and preparing for a more conservative demand growth curve.
“In terms of very good management teams, the ones I would highlight again would be Eclipsys (ECLP). Their management team has been very focused on the opportunities with a very conservative viewpoint, and it’s a seasoned management team,” Carpio said. “I think the way they are approaching the issue in terms of resources, and the wealth and organization strength seems to be the right way.”
Carpio also points to Allscripts-Misys Healthcare Solutions (MDRX) as another company that’s targeted its focus on long-term opportunities.
“They have been very good at tempering expectations, building a recurring revenue base, good cash flow and creating visibility for earnings,” he said. “So they are taking the right approach also in preparation.”
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