In this excerpt from TWST‘s interview with Michael Cherny, a vice president and research analyst at Deutsche Bank Securities, Inc., Cherny discusses the impact of the American Recovery and Reinvestment Act (ARRA) on the health care IT industry, and points out which stocks he believes stand to benefit the most from government stimulus dollars.
TWST: How would you say the political situation in Washington will affect the health care IT industry now?
Mr. Cherny: I think the biggest movement you see for the industry is the funding related to the HITECH Act included in the American Recovery and Reinvestment Act, which provided $19 billion – upwards of $30 billion if you take some of the other sources involved in the stimulus – to help drive EHR adoption. I apologize if I interchange EHR and EMR – I mean, the same thing. There is a very clear pace that Obama wants to continue on the mandate originally set out by both President Clinton and President Bush before him to try and get the United States to a point where we have every American having some sort of EHR. This is the first time that you’ve had a significant source of funding to help try and support that drive. So very clearly, technology is a major focus of this administration in terms of the ability to deliver better health care.
TWST: Are there any particular companies in this base that you think are setting themselves up well to meet the anticipated demand?
Mr. Cherny: Yes, the one company that we focus on, that we think is well positioned for the impact of the stimulus, is athenahealth (ATHN). They grew up or kind of started the company as a revenue cycle management, a company that then branched out into the electronic health record market. They go to market with software as a service, or as they refer to it, as software-enabled service solution, which tends to be lower priced, easier to deploy, more flexible. Those qualities are something that we have seen from our channel checks that physicians in the smaller end of the market, which is by far the most under-penetrated area of EHRs, view as the kind of quality they want in their technology. So athena, which has close to 20,000 physicians already using its athenaCollector, or revenue cycle management product, and less than a thousand in their EHR product, has a very strong retail opportunity to help drive further adoption of its own product.
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