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An Exclusive Interview with Michael Cherny, a Managing Director and Analyst on ISI Group's Health Care Services and Technology Research Team: Are Hospitals Ready for the Next Phase in Health Care IT?

67 WALL STREET, New York - May 23, 2014 - 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: Health Care - Affordable Care Act - Electronic Health Records Implementation - Healthcare IT Consolidation Trends - Data Analytics - Population Health Management

Companies include: Cerner Corp. (CERN), Athenahealth, Inc. (ATHN), Allscripts-Misys Healthcare So (MDRX), Quality Systems Inc. (QSII), MedAssets, Inc. (MDAS) and many others.

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

TWST: Where are you focusing your attention within that health care IT space?

Mr. Cherny: Within health IT, now that we're into the middle parts or even past the initial hump of meaningful use both from an adoption and a funding perspective, the big question has been, what's the next leg of growth? Some of the big buzz words, such as population health management, analytics, advanced revenue cycle management, interoperability and care coordination are key trends that are prepared to make their way into the health IT market, and will be a big source of the next leg of growth for the space as a whole.

TWST: Which ones of those are the furthest along at this point?

Mr. Cherny: From a contribution perspective, revenue cycle management and the next leg of revenue cycle management is the most advanced. If you think about the space, revenue cycle management has been around for decades in some way, shape or form. With some of the changes related to billing procedures, both on the payer side and the failed expected conversion to ICD-10, the concept of hospital and physicians finding ways to get paid more and get paid faster is one that has always been an underlying theme. That's been true through the recent EHR adoption acceleration due to meaningful use. Along those lines, analytics is an area that revenue cycle management has typically been at the forefront of, but it's now finding its way into more and more technology usage across health IT.

TWST: When you say the next leg of RCM, do we already know what that next leg is or what you're expecting it to be?

Mr. Cherny: It's very much in the way you think about the evolution of revenue cycle management. One big component is the next generation of patient accounting systems. There are various core patient accounting systems that have been in the market for 15 or 20 years, and they need to be turned over, as you would see with any software-based industry. That's one area that's being complemented by a variety of different bolt-on technologies aimed at creating the most efficient billing process possible.

TWST: What's the latest on meaningful use, and how is it driving the space these days?

Mr. Cherny: We've moved into the Stage 2 attestation period for meaningful use adoption. Stage 2 has a higher barrier regarding the technological appointments that need to be met in order to maintain your stimulus levels. This year is also still an incentive year before we move pretty quickly toward penalties.

We've also seen, from a competitive perspective, a greater consolidation toward best-in-breed vendors as these requirements related to meaningful use and other requirements become more prevalent. That's where companies such as Cerner (CERN) and Epic have really lengthened their competitive lead in the market.

TWST: We've also seen a return to the IPO in this area. What are you're seeing, what's driving it, and how big of a wave do you foresee?

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.