Advantages for Value-Based Health Care IT Vendors Exposed to Hospitals: A Wall Street Transcript Interview with Charles Rhyee, a Managing Director and Senior Research Analyst Covering the Health Care Technology Sector at Cowen and Company

Wall Street Transcript

67 WALL STREET, New York - November 4, 2013 - The Wall Street Transcript has just published its Health Care IT Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: HIT Consolidation Activity - Electronic Health Records Implementation - Affordable Care Act - Healthcare IT Consolidation Trends

Companies include: Cerner Corp. (CERN), Allscripts-Misys Healthcare So (MDRX), McKesson Corp. (MCK), Unitedhealth Group, Inc. (UNH), Aetna Inc. (AET), Siemens AG (SI), General Electric Co. (GE), MedAssets, Inc. (MDAS) and many others,

In the following excerpt from the Health Care IT Report, an experienced analyst discusses the outlook for the sector for investors:

TWST: How would you characterize the industry over the last 12 months or so?

Mr. Rhyee: Certainly a lot has been going on since 2009, and even before that. Over the last year, I think we've been in a transition period as we move out of meaningful use stage one and what a lot of people looked at as a major buying cycle. Right now, people are waiting to see what comes next as stage two ramps up and some other health-reform-related initiatives such as value-based purchasing and non-health-reform-related initiatives, such as ICD-10, all start ticking up.

I think people are looking to see which direction we're really going to go here. The general assumption, and I would tend to agree, is that we're moving toward another buying cycle soon as people ramp up for a number of things, some being pushed as a result of health reform.

TWST: Do stage two and stage three present some serious challenges with the systems and solutions people are using?

Mr. Rhyee: I think there's been a general assumption by investors that stage two itself will not prompt nearly as much purchasing as stage one was, given that for stage one, you needed to really buy a lot of new software. In our quarterly surveys of CIOs, over the last four to five quarters, we've asked them how much they are planning to spend on stage two. Routinely people say they're going to spend less than for stage one, but the percentage versus stage one has been actually shrinking.

Actually, at the largest hospitals I'd say it's almost 50:50 between those who'll spend more versus those who will spend less. Last summer the delta in the amount of dollars spent versus stage one was about 36% less, but that's shrunk to the midteens. That tells us that as you get closer to it, hospitals are finding it's much harder to meet those stage two requirements, and it's going to cost them more than they probably assumed.

TWST: Are they thinking about what they need to do for stage three as well?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

View Comments