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Health IT Stocks: A Good Long-Term Bet?

By  +Follow June 26, 2013 10:55AM
Tickers Mentioned:

Efforts to encourage the use of electronic medical records, or EMR, have existed since at least 1996 when the Health Insurance Portability and Accountability Act was passed with the intention of more effectively combatting insurance fraud. Along with the Affordable Care Act (ACA) this previous legislation has been bolstered by the Physician Quality Reporting Initiative that seeks to incentivize physicians and hospitals around the country to adopt a modernized medical records system.

Bloomberg recently reported that the U.S. ranks only 7th among industrialized nations in terms of its adoption of EMR, with 69 percent of physicians claiming to have used the electronic system in 2012. But one can only imagine that the number will increase, and that it will do so in the short-term; according to Accenture research, the $24 billion dollars in revenue generated globally by the industry in 2012 is set to increase some 10 percent a year through 2015.

Even a precursory look at some of the publicly traded companies that have become involved in the IT side of the health industry would seem to corroborate this. McKesson Corporation (MCK), is one such example. The $25.7 billion market-cap company is trading at $114.82, up 22 percent over the last 12 months.

The same can be said for Cerner Corp. (CERN), a $16.33 billion market cap company with shares at $96.35, up nearly 20 percent on the year, as well as Allscripts Healthcare solutions (MDRX), a $2.2 billion market cap company trading at $12.75 per share and up over 25 percent in the past year.

EMR seems to be the inevitable way of the future for how medical records are kept, and a host of other developed countries are way ahead of the U.S. in effectively utilizing them. But there have been a number of controversies that have arisen along with the increasing adoption of digitized records in the U.S. since the ACA was first approved in 2010.

Reports have surfaced that harmful and at times lethal doses of drugs have been administered to patients due to human error in the process of data entry and network delays in updating medical information. A December study from the Pennsylvania Patient Safety Authority found that over an 8-year period, 3,099 incidents of medical errors due to difficulties with electronic records were reported. 1,142 of those incidents were reported in 2011 alone, more than twice the number that were reported in the previous year.

Furthermore, companies that design EMR software are not beholden to any form of government oversight in the way that, say, medical equipment makers are forced to report injuries and deaths resulting from the use of their products. There have also been privacy concerns with regard to how a patient’s medical information may be sold for marketing purposes.

That said, some 200,000 deaths per year are the result of medical malpractice, with a great number of these resulting from preventable errors, including those involving a patient’s health records. EMR errors appear to be most common when a hospital first changes over to an electronic system, but there is plenty of evidence to suggest that a properly functioning EMR system actually helps to reduce these errors, and along with them, the resulting financial burden on the health care system in general. And this could mean that health IT stocks have a bright future ahead of them indeed.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

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Results for CERN
Adam Grimes
21 Aug 14 06:56:13
Early morning stats updated: http://t.co/2dNBU7rCve $BAX, $AZN, $BWP, $ACT, $WUBA, $CERN, $NEM, $DLTR, $HPQ, $AZN, $DRL(E), $SCCO, $MON, $GG
Rosner Stocks
21 Aug 14 06:20:54
$GDX P/E Ratio http://t.co/hsiCNiXwN1 Also See: $CERN $EA $BEAV $NKY ~
Stock News Updates
21 Aug 14 06:10:25
$CERN: Cerner to Acquire Siemens Health Services for $1.3 Billion http://t.co/L23lFfjXjQ http://t.co/djCLLhD5Md
Stock Forums
21 Aug 14 05:48:22
$FFIV Day High http://t.co/DDGRArcai9 Also See: $CERN $COP $YUM $SMH ~
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Parabolic Sar Buy Signals 1/2 $AA $ANN $ARIA $ASNA $ATML $CACB $CERN $CIEN $EMN $EXPR $FAST http://t.co/aE8URGZ4qg
Chasing Stars
21 Aug 14 05:09:51
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Rosner Stocks
21 Aug 14 04:43:07
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Companies in News
21 Aug 14 03:10:26
$CERN: Investor's Alert - Cerner Corporation (NASDAQ:CERN), Youku Tudou Inc (ADR ... http://t.co/WMuNkLPsRx http://t.co/lkX5q0E1dk
Business News Watch
21 Aug 14 02:10:22
$CERN: Investor's Alert - Cerner Corporation (NASDAQ:CERN), Youku Tudou Inc (ADR ... http://t.co/KMnaRfhZHi http://t.co/6p4bOSK5OS
Stock Forums
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Investors Hangout
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Market Updater
21 Aug 14 00:10:22
$CERN: Cerner: Very Nice Deal, Yet No Overall Appeal http://t.co/oAeY8mKuhi http://t.co/BQbyVkzOyC
Investors Hangout
21 Aug 14 00:02:47
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20 Aug 14 23:59:38
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Rosner Stocks
20 Aug 14 21:58:06
Rosner: CERN Cerner Corp. $CERN Company Overview Stock http://t.co/h5WnHirHGq
Stock Forums
20 Aug 14 21:47:10
$AKS 52Wk High http://t.co/tac2pjiv55 Also See: $CERN $SCTY $FXI $VXX ~
Rosner Stocks
20 Aug 14 21:35:46
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Stock Market News
20 Aug 14 21:10:27
$CERN: CERNER CORP /MO/ Files SEC form 8-K, Entry into a Material Definitive Agreement http://t.co/jrqSghNXuX http://t.co/u7Dp9Dc40Z
20 Aug 14 20:57:36
$GLBH closed up 150% today! Major Update: http://t.co/WFeoEydWra $SYMC $CERN $ATVI
20 Aug 14 12:36:06
SKYF ran up as much as 300% Today! News Update: http://t.co/5A4Sg5sQA5 $SYMC $CERN $ATVI
John Earl Burnett
20 Aug 14 10:37:16
Global #Healthcare #IT Industry http://t.co/07uBSH8ug4 $CERN Cerner Corporation @Cerner
20 Aug 14 10:19:21
$CERN $BK $WFM (two new longs and taking risk off in WFM) http://t.co/8JCZCU3UcL
20 Aug 14 09:31:55
$CERN good looking weekly consolidation taking shape
Mitch Powitz
20 Aug 14 05:19:08
RT @howardlindzon: The ten stocks that have beaten $goog the last 10 years http://t.co/1WBVGYtisj $cern $gmcr #biotechs
Biz News Pioneer
20 Aug 14 05:10:32
$CERN: Cerner Corp to Acquire Siemens Health Services in $1.3 Billion Deal http://t.co/MGKPj9F0Xr http://t.co/XemrjKYxAK
20 Aug 14 05:09:19
RT @howardlindzon: The ten stocks that have beaten $goog the last 10 years http://t.co/1WBVGYtisj $cern $gmcr #biotechs
20 Aug 14 04:55:22
The ten stocks that have beaten $goog the last 10 years http://t.co/1WBVGYtisj $cern $gmcr #biotechs
O'Brien Greene & Co.
19 Aug 14 10:02:32
Will Apple's next big move be in healthcare? http://t.co/yGgPAtDxCk $AAPL $CERN $MDSO #investing #apple
Market Int Center
19 Aug 14 06:20:31
Cerner $CERN Showing Support Near $55.23 ( http://t.co/Hn6Q5nFpfF )
Media Sentiment
18 Aug 14 09:20:04
$CERN received a new alert. Find out why at http://t.co/WHJp8eTsSr #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 225
Market Int Center
18 Aug 14 09:16:38
Cerner $CERN Showing Bullish Technicals With Resistance At $56.77 ( http://t.co/RaA0S1nQMs )
Financial Headlines
18 Aug 14 09:10:25
$CERN: Cerner To Buy Siemens Health IT Business For $1.3 Billion http://t.co/1KQX4rF1xC http://t.co/3eXmt2vWsA
Shelley Wehmeyer
18 Aug 14 08:24:53
Insider Selling: Cerner CEO Unloads 54,000 Shares of Stock $CERN http://t.co/KBx8n6HnUu via @RatingsNetwork
Stocks for the Week
18 Aug 14 05:03:16
Best Buys for 8/18 - $CHRW, $PCLN, $OXY, $CERN. http://t.co/oql7KOAsZY #stocks #finance #investing
US Banking News
18 Aug 14 04:49:35
Insider Selling: Cerner CEO Unloads 54,000 Shares of Stock $CERN http://t.co/HWHscgHRhU
Seeking Alpha
16 Aug 14 22:24:57
http://t.co/9cjxEX6WGa Daily Round Up: 8/14/14 http://t.co/y9N6JWSUFA $AXE $BKD $CERN $GLP $GOOG $INSM $NLY $NVTL $PACB $QCRH $RLJ $RSG
David Razor
16 Aug 14 08:47:05
RT @tweewinn: $MTVX selling a property to $CERN? http://t.co/uNhMH6C7hM
16 Aug 14 08:29:12
$MTVX selling a property to $CERN? http://t.co/uNhMH6C7hM
Stock News Updates
15 Aug 14 12:10:33
$CERN: [$$] Cerner to Acquire Siemens Unit http://t.co/tlwNHlFGcC http://t.co/RFMfk3AfrP
Market Headlines
15 Aug 14 11:10:24
$CERN: Will Cerner (CERN) Stock Be Helped By This Analyst Upgrade? http://t.co/yE83pywLWg http://t.co/cfmKuvWHeq
Market Int Center
15 Aug 14 10:48:53
Cerner $CERN Trading Near $57.03 Resistance Level ( http://t.co/0o1G6sGvfV )
Ticker Report
15 Aug 14 10:43:23
Insider Selling: Neal L. Patterson Sells 54,000 Shares of Cerner Stock $CERN http://t.co/LQrUdV0BO5
15 Aug 14 07:53:29
Successful marketing trip to Chicago - lot of interest in $CVS $MCK $WAG $ISRG $CERN $MDRX #healthcare
By  +Follow June 26, 2013 10:55AM



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