In a concerted effort to tap the growing market for electronic
health record ("EHR"), imaging and interoperability solutions
) recently struck another deal with St. Cloud, Minnesota-based St.
Cloud Hospital, a part of Centracare Health System and the largest
healthcare provider in St. Cloud.
Per the deal, St. Cloud Hospital will deploy Merge's Picture
Archiving and Communication Systems ("PACS"), a real-time picture
archiving communication system, helping radiologists to manage
images and data in order to meet the "Meaningful Use" need.
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With the latest Supreme Court mandate upholding the majority of the
Patient Protection and Affordable Care Act 2010, we expect the
health care market to be more competitive and challenging with the
healthcare providers looking to reform their business by
drastically reducing costs. In this regard, we believe Merge
"Meaningful Use" need solutions will emerge more successfully with
several ways to reduce cost and increase work efficiencies.
Piloting over 350,000 imaging studies annually, St. Cloud Hospital
believes that the implementation of Merge PACS in its system will
eliminate the need for other workstations and provide with one
centralized place for the radiologists, thereby streamlining the
workflow and reducing expenses.
Apart from PACS, Merge's radiology solutions comprise Merge RIS, a
web-based radiology information system used for streamlining
workflow as well as to meet the Meaningful Use criteria. The other
meaningful use solutions of Merge are Merge Financials (a web-based
billing system), Merge Documents (a paperless office solution),
Merge Referral Portal and Merge Dashboards.
In May of this year, Merge entered into another deal with national
radiology group Lakeland Healthcare to provide its entire suite of
cloud-hosted radiology solutions. In the same month, Merge also
added 12 new practices to its ever-growing list of users who
selected its complete EHR solution to achieve Meaningful Use need.
Presently, Merge Meaningful Use solutions are deployed by over 89
clients, representing more than 850 physicians.
Favorable demographic trends, reinforced by a supportive regulatory
environment, are expected to sustain strong growth in demand for
EHR-related software in the foreseeable future. We believe that
Merge is well placed to grab a meaningful share of the
multi-billion dollar ARRA-related healthcare information technology
However, we remain concerned about the declining Medicare
reimbursement for advanced medical imaging that could negatively
affect hospital and imaging clinic revenues, thereby reducing the
demand for imaging-related software and services offered by Merge.
Furthermore, the presence of many big players like
) has made the healthcare solutions and services market highly
Presently, Merge retains a short-term Zacks #3 Rank (Hold). Over
the long term, we have a Neutral recommendation on the stock.