Cerner Teams With WellPoint

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Leading healthcare information technology (“HCIT”) solutions provider, Cerner Corporation (CERN) recently reported that it was chosen by WellPoint Inc. (WLP), a large health benefits firm, to team up for a project to check for ICD-10 commercial continuity.  Cerner will carry out complete ICD-10 and ICD-9 checks with WellPoint for chosen clients.

Cerner believes that its role in the project will permit it to test its composite systems before the transition to ICD-10. The transition may severely affect the sales of health care entities. The purpose of this project is to establish that work flows will function across all systems.

WellPoint is a standalone licensee of Blue Cross and Blue Shield Association.  The company caters to over 36 million individuals through its affiliated plans and about 67 millions persons via its subsidiaries.

Cerner remains the trend setter among pure-play, publicly traded healthcare IT (:HCIT) vendors. The company is diversified not only on a global basis but serves both hospitals and ambulatory outfits. Its integrated solutions have captured market share. While greenfield opportunities are shrinking, the replacement market is growing.

We believe long-term investors may consider Cerner, as it serves a sizeable installed hospital base that requires composite clinically-oriented applications complying with “meaningful use” requirements, reimbursement difficulties and complicated coding challenges. The company has long-standing, integrated and seamless solutions for both inpatient and ambulatory settings.

On the negative side, the federal Stimulus program is gradually winding down. Cerner faces stiff competition from established HCIT players, such as Athenahealth (ATHN).

We currently have a Zacks Rank #3 (Hold) on Cerner. However, we are more positive about other stocks such as Merge Healthcare Incorporated (MRGE) and Becton, Dickinson and Company (BDX) both of which carry a Zacks Rank #2 (Buy) and are expected to do well. 

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