Recently, NextGen Healthcare Information Systems, a fully
owned subsidiary of
Quality Systems Inc.
) and a player in the health care information technology market,
revealed that it has signed an agreement with Chinese Hospital of
San Francisco to install NextGen Inpatient Clinicals. The
hospital will utilize this platform to enhance efficiency,
automate systems and improve quality of care.
Chinese Hospital is an acute care, not for profit hospital
providing a notable range of services, under surgical, specialty
and medical categories. By using the services of Quality Systems'
NextGen, the hospital intends to develop a single and shared
patient record for both its ambulatory and inpatient
QSII's NextGen Inpatient Clinicals is a mobile-friendly and
scalable software set up. By implementing this platform, Chinese
Hospital will develop the ability to meet the meaningful use
Quality Systems runs a pure-play business model in an industry
with a number of catalysts, which provoke frequent speculation
about mergers and acquisitions. Of late, the condition of its
pipeline metric has mostly 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 the execution
risk emanating from Quality Systems' entry into the rural
Moreover, competition is intense from well regarded players
) 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 #5 (Strong Sell). We
expect other stocks in the industry, such as
), which carries a Zacks Rank #2 (Buy), to do well.
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