NextGen Healthcare Information Systems, a full subsidiary of
health care IT vendor
Quality Systems Inc.
), recently revealed that T-System, Inc. will utilize NextGen
Practice Management in order to improve billing in revenue cycle
management for its customers. As per the agreement, NextGen RCM
Services will deploy the NextGen Practice Management offering for
T-System facilitates better emergency care with offerings that
address operational, fiscal, clinical and regulatory concerns of
emergency facilities and hospitals. Roughly 40% of emergency
departments in the country utilize offerings from T-System.
In 2012, T-System unveiled its latest revenue cycle
outsourcing offering via the RevCycle+ product for inpatient and
emergency room customers. T-System will standardize its offerings
by utilizing NextGen Practice Management at different sites. In
particular, NextGen Practice Management will render collections,
billing and other functions more manageable besides automating
the billing function.
Quality Systems runs a pure-play business model in an
attractive industry with a large number of catalysts, which
provoke frequent speculation about mergers and acquisitions. On
the positive side, we observe the high proportion of recurring
revenues. Of late, however, the condition of the pipeline metric
has not been encouraging.
The company has made multiple acquisitions to bolster organic
growth. Its acquisitions are expected to facilitate its entry in
the small hospital segment. We are concerned about execution risk
emanating from Quality Systems' entry into the rural inpatient
Moreover, competition is intense from well regarded players
Allscripts Healthcare Solutions
) and others. Price discounting is frequent, particularly at the
lower end, and Software as a Service (SaaS) based model appears
to have exacerbated pricing pressure. While fresh projects have
shrunk in number, the replacement market is growing.
Quality Systems has traditionally focused on providing
solutions for physician practices. However, core ambulatory EHR
providers such as Quality Systems will see opportunities for
product sales shrink, as physician groups are increasingly
absorbed into hospitals. Currently, the stock retains a Zacks
Rank #4 (Sell).
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