HealthIT boom showing on bottom lines

Meaningful use is already fattening the bottom lines of companies like Allscripts-Misys, where profit for the last quarter was up 17%.

The boom in health IT is starting to show up on the bottom lines of the major players.

This despite the fact that the vast majority of the HITECH stimulus won't become payable until fiscal 2011, which starts in October. Hospitals and clinics are expected to buy now and prove the effectiveness of their new solutions before the federal funding comes in.

Vendors like CSC are now opening their community sites to discuss meaningful use, with 85% of hospitals and clinics saying they're in the process of installing Electronic Health Record (EHR) systems.

This is fattening the bottom lines of companies like Allscripts-Misys, where profit for the last quarter was up 17%.

But the coming pressure on costs from health insurers is also fattening the bottom lines of plan managers like Medco, whose earnings per share were up 20%.

The two trends are closely related. The goal of meaningful use is to cut the cost of treating preventable illness, which now costs $720 billion, 70% of the nation's total health care bill.

Where will savings come from:

  • Managing medications and putting people on lower-cost, self-administered drugs.
  • Reducing errors that lead to malpractice suits.
  • Preventing the onset of heart disease and diabetes through diet and wellness programs.

Some of what is happening is described in books like Angel Garcia's Do No Harm (above), which describes both the aim of medicine and of health reform.

EHRs are supposed to detect conditions earlier, deliver best practices to doctors and hospitals, and build closer relationships between patients and health care providers of all sorts. Data in EHRs will populate the Personal Health Records (PHRs) now being offered to patients by insurers, hospitals, and consumer health sites.

But meantime they mean profits.

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