The healthcare industry seems to be the subject of almost continuous debate. Often, the discussions circle around Medicaid and Medicare payment issues, budget cuts, or, more recently, the government’s reform of the healthcare system. A modernization issue that has gained in importance over the past few years places medical records at the center of discussion; specifically, the form in which they are retained.

Traditionally, medical providers have kept such records in paper form. In 2009, a government-funded stimulus program, named the Health Information Technology for Economic and Clinical Health Act (HITECH Act), was introduced to move away from such material archives and towards purely digitized electronic health records (EHR). The goal of this transition is to build and fortify the healthcare IT infrastructure and produce a quick and efficient means of storing and accessing a patient’s medical records-including the transfer and sharing of records between physicians.

The stimulus end of this act is geared towards medical providers. The government has allocated $17.2 billion in funds to be distributed to providers who, as of April 18th, could begin attesting to “meaningful use,” showing that they have implemented the electronic record-keeping method. In other words, healthcare service centers are given a financial incentive to move towards efficiency, which is likely to lead to further benefits for the institutions. Healthcare providers can be awarded up to $40,000 under the Medicare Incentive Program or up to $63,750 that the Medicaid Incentive Program. These health institutions, however, are not the only entities which are likely to prosper from this effort. Several companies--specifically medical technology companies--are on track to benefit as well.

One company that should see some benefit from HITECH is McKesson Corporation (MCK). It is one of the largest health IT companies in the world providing supply, information, and care management products and services designed to reduce costs and improve quality across the healthcare industry.

In response to HITECH, McKesson has developed the Achieve HIT program, which educates hospitals and doctors on how IT can be used in the healthcare sector, and encourages them to take part in the stimulus package by converting to electronic medical records and proving “meaningful use”. Too, it has teamed up with both Hewlett-Packard (HPQ - Free Hewlett-Packard Stock Report) and Intel (INTC - Free Intel Stock Report) in order to better aid physicians in making this transition. McKesson’s vast presence and strong reputation should attract additional medical providers to its products and services.

Cerner Corporation (CERN) designs, develops, markets, installs, and supports clinical management information systems. The company already services a large customer base, but that does not limit its growth potential. In fact, many of Cerner’s customers, including hospitals, delivery systems, and physicians, are allocating more of their cash to these clinical information systems. Indeed, these institutions must make adjustments to their systems in order to meet the “meaningful use” criteria. As a result, revenue should increase as consumers purchase additional products from Cerner to work towards fulfilling the requirements.

Smaller athenahealth, Inc. (ATHN), provides Internet-based business services for physician practices in the United States. The company is based in Massachusetts and has over 2,000 clients across 45 states. athenahealth offers cloud-based electronic health record storage, which has gained from this incentive program.

Within the last couple of weeks, the company has revealed that University Hospitals, one of the largest community-based health systems in the country, and the Wisconsin Health Information Technology Extension Center (WHITEC), a federally designated center operating in Wisconsin, among others, have chosen to adopt athenahealth as an EHR vendor. Each institution supports over 1,000 medical providers. Although athenahealth is offering its services at a discount to its $800/month rate, this new business is likely to make a nice addition to the company’s earnings.

All in all, the HITECH Act is on its path to reducing or eliminating the conventional paperwork found in many medical settings. Although there will be some bumps along the way, likely having to do with transferring records across different operating systems, these companies seem poised to make the adaptations that are necessary to increase business, boost earnings, and foster competition.


At the time of this article’s writing, the author did not have positions in any of the companies mentioned.