In a concerted effort to tap the growing market for electronic
health record (EHR), imaging and interoperability solutions
) recently added twelve 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.
The company encouragingly noted that the Centers for Medicare
& Medicaid Services (CMS) proposed a second set (Stage 2) of
the Medicare/Medicaid Meaningful Use EHR program (released in March
2012) that included specialties like radiology and orthopaedics in
meaningful use. The company remains optimistic that with this Stage
2 requirement, the specialty physicians will come up to meet the
Meaningful Use criteria, thereby driving the demandfor its
Merge's meaningful use needs solutions include Merge RIS v7.0
that provides a radiology-specific EHR with complete certification.
The product enables healthcare providers to efficiently record
patient details. With the complete EHR Ambulatory certification,
RIS v7.0 has emerged as the industry's leading radiology
information system (RIS). With RIS v7.0, users can now utilize a
single product for radiology-specific workflow to qualify for up to
$44,000 in funding under the Health Information Technology for
Economic and Clinical Health (HITECH) Act and also avoid future
Merge OrthoEMR, a product for the orthopaedic physicians,
received the complete EHR Ambulatory certification. While
qualifying for incentive funds, this product enables orthopaedic
physicians to efficiently record patient details and eliminates the
need for carrying images.
Healthcare IT Industry- Current Scenario
As per the estimates of the global market research and
information analysis company RNCO, the US healthcare IT market is
anticipated to grow at a compound annual growth rate (CAGR) of over
24% during 2012-2014. This market will gradually adopt electronic
health records (EHRs) to meet HITECH funding requirements. Merge is
expected to target this market given its imaging interoperability
The overall US health IT (HIT) market witnessed a dramatic
change in February 2009 with the passing of the Health Information
Technology for Economic and Clinical Health (HITECH) Act, as part
of the American Recovery and Reinvestment Act (ARRA), an economic
stimulus bill. The ARRA and accompanying HITECH provisions allotted
more than $35 billion in incentives, which reward providers who use
certified EHRs in a meaningful way.
According to the CMS, through December 2011, more than 175,000
professionals and hospitals 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 Stimulus aims to increase the use of EHR by medical
practitioners, in both ambulatory and hospital-based settings. As a
result, selected companies in this space are witnessing heightened
investor interest. 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 Merge is well placed to bag a meaningful share
of the multi-billion dollar ARRA-related healthcare information
technology investment opportunity.
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
(MCK) has made the healthcare solutions and services market highly
Presently, Merge retains a short-term Zacks #4 Rank (Sell). 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
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