Enterprise imaging and interoperability solutions provider
Merge Healthcare
(
MRGE
) recently extended its existing relationship with Mercy, the 8
th
major Catholic health care system in the US, through a new deal. As
per the new deal, Mercy will adopt Merge's vendor neutral archive
iConnect VNA to serve its enterprise of over 200 clinics and
hospitals in the midwest. However, financial terms of the deal were
not disclosed.
The recent deal enables Mercy to meet the 'Meaningful Use' needs
of imaging interoperability and provide better service to more than
3 million people per year.
Presently, used at more than 300 sites, Merge's iConnect VNA is
the most widely deployed vendor neutral archive in the healthcare
industry. In addition to this, the Merge iConnect Suite also
includes iConnect Share and iConnect Access. With greater adoption
of electronic health records (EHR) in doctor's offices, hospitals
and imaging centers, the smooth exchange of data becomes essential.
Under this circumstance, Merge's iConnect platform has gained
significance as it is a vendor-neutral archive.
Currently, imaging in laboratories accounts for over 90% of data
storage in healthcare. According to Frost and Sullivan and Merge's
recent research reports, the global market for imaging software and
services, healthcare IT interoperability solutions and electronic
health records (EHR) solutions for radiology, cardiology,
ophthalmology and orthopedics is worth $7.5 billion annually. With
greater adoption of EHRs in doctor's offices, hospitals and imaging
centers, there is a consequent increase in the need for data
exchange.
We also believe that Merge possesses strong growth potential in
the Radiology Information System/ Picture Archiving and
Communication System (RIS/PACS) market. There is immense potential
in the diagnostic imaging market, especially with the government's
emphasis on health IT (
HIT
) and an ageing population.
According to the Centers for Medicare and Medicaid Services (
CMS
), through December 2011, more than 175,000 professionals and
hospitals were registered for meaningful use incentive programs and
$2.5 billion was paid out in 2011 to eligible hospitals and
professionals. The incentives will be offered for a period of 4-5
years, after which physicians will be penalized for not adopting
proper measures. The incentive aims to enhance the use of EHR by
medical practitioners, in both ambulatory and hospital-based
settings.
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
General Electric
(
GE
) and
McKesson Corporation
(
MCK
) has made the healthcare solutions and services market highly
competitive.
Presently, Merge retains a short-term Zacks #2 Rank (Buy). Over
the long term, we have a 'Neutral' recommendation on the stock.
GENL ELECTRIC (
GE
): Free Stock Analysis Report
MCKESSON CORP (
MCK
): Free Stock Analysis Report
MERGE HEALTHCAR (
MRGE
): Free Stock Analysis Report
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