Imaging and interoperability solutions provider,
) continues to expand rapidly through new product developments.
The company recently announced an update to its Eye Care PACS
solution that will provide support for DICOM OPT ("OCT")
This OCT standard plays a crucial role at eye care facilities
in obtaining valuable images and data. Merge being among the
first vendors to support the OCT standard, expects this
achievement to help grow its enterprise imaging solutions for eye
Merge Eye Care PACS is a web-based image management
solutionthat automatically imports images and diagnostic reports
from multiple diagnostic devices into a single, web-based system
which can be reviewed from anywhere, anytime.
This advanced solution of Merge, which is a part of the
company's Electronic Health Record (EHR), incorporates all
diagnostic devices and clinical applications utilized in an
ophthalmic practice into one end to end system. This enables
physicians to review their patient's images and diagnostic
reports via a web browser or web-enabled device.
The overall U.S. health IT (HIT) market witnessed a dramatic
change in February 2009 after the Health Information Technology
for Economic and Clinical Health (HITECH) Act, was passed as part
of the American Recovery and Reinvestment Act (ARRA), an economic
stimulus bill. The ARRA along with the HITECH provisions included
more than $35 billion in incentives, which reward providers who
use certified EHRs in a meaningful way.
According to the Centers for Medicare and Medicaid Services
(CMS), through December 2011, more than 175,000 professionals and
hospitals registered for the '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
In August 2012, the final regulations for the stage 2 of the
Meaningful Use incentive program EHR had been released along with
the final rule on certification of EHR technology. As per this
final mandate, the 2009 ARRA, which authorized the $27 billion
program, requires providers to use certified EHRs in order to
earn bonus payments from Medicare, Medicaid or both for
Meaningful Use. Implementation of the final stage 2 ruling will
begin in 2014.
The stimulus aims to increase the use of EHR by medical
practitioners, in both ambulatory and hospital-based settings. As
a result, only a few 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.
According to the recent information from Frost & Sullivan and
Merge's own research, the global market for imaging software and
services, healthcare IT interoperability solutions, and EHR
solutions for radiology, cardiology, ophthalmology and
orthopedics is worth $7.5 billion annually.
Thus, with greater adoption of EHRs in doctor's offices,
hospitals and imaging centers, the need for data exchange is on
the rise. In this backdrop, a reliable imaging interoperability
platform becomes significant as a vendor-neutral archive
We expect that the persistent product development and
continued client wins will benefit Merge in the long run. It is
believed that 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 the imaging-related software and services offered by
Furthermore, the presence of many big players like
) has made the healthcare solutions and services market highly
Currently, Merge retains a short-term Zacks #3 Rank (Hold).
Over the long term, we have a Neutral recommendation on the
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