For those of people that follows the stock market, the market has had an incredible turn around since the middle of March. One of the areas that experienced tremendous growth is health care IT/software area. Company like Allscripts-Misys (MDRX), Cerner (CERN), Quality Systems (QSII) and Eclipsys (ECLP). Some of those companies have more than doubled since mid March.
The reason for optimism:
- HITECH Stimulus Bill will give physician $44k ~ $64k per physician for adopting an approved EHR system. This will lead to higher revenues for EHR vendors.
- Software systems usually charges 18% yearly maintenance fee and it takes a couple years to implement a working EHR system.
- With the number of health care IT companies out there, it is bound for consolidation. In addition, other big software players like IBM might want to get involved through merger and acquisition.
- As the population ages, there will be a larger need for better health care related software.
Reasons for caution:
- The stock price for EHR related company has surged by leap and bounds during the previous 6 months.
Disclosure: I do not own any of the stock mentioned above and the post is not dissuading or recommending EHR stocks. Do you own research before making investment!