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The high price of health care is killing health some insurers, such as UnitedHealth Group (NYSE: UNH ) , because they haven't been able to increase premiums to keep up with rising costs. But not every company in the sector is a victim. Those that provide products and services and are lowering their costs should do well in this environment. Here's a motley crew for your consideration.
Outsourcing the lab review
Genoptix (Nasdaq: GXDX ) helps community-based hematologists and oncologists outsource the labor-intensive task of determining which diagnostic tests to run on patients. Rather than send the patient to different labs with different experts interpreting the results, the doctor just draws the sample and sends it into Genoptix, where the company's experts can keep track of a patient's progress.
The company isn't widely known, but its stock is up on the year so far, and that's nothing to sneeze at. As long as Genoptix's staff can work more efficiently than the regional labs can, the company can make money, the patients and doctors can save time and money, and the patient probably gets better service to boot. It's outsourcing at its finest.
IT meets health care
It's shocking how many health records are still kept on paper. The personal computer has been available for more than 20 years, but doctors are still using their chicken scratches to record observations on paper stuck into charts. Any way you look at it, that has to be pretty darn inefficient.
Companies such as Allscripts and Quality Systems (Nasdaq: QSII ) have the potential to make a bundle selling their computer programs to get those records off paper and into the digital world. And as the companies convert doctors, that should help the online health initiatives at Google (NYSE: GOOG ) , Microsoft (Nasdaq: MSFT ) , and WebMD, all of which have websites designed to aggregate health information. The only way most people are going to start using those services is if the doctors go digital and make records available to patients online.
Even the government is pushing health-care IT. Last month, the Centers for Medicare & Medicaid Services said they'll give a bonus to doctors who use electronic prescriptions. Depending on how many of the doctor's patients are on the government programs, the bonus might be able to pay for the cost of setting up the system. Allscripts could really benefit because it has a standalone, Web-based electronic prescription system that should help lure in doctors who don't want to go fully electronic with their patients' health records.
Drugs at your doorstep
Pharmacy-benefit managers Medco Health Solutions (NYSE: MHS ) and Express Scripts (Nasdaq: ESRX ) are saving everyone money, and that's helped them slide considerably less than the S&P 500 has.
Companies and health insurers pay the pharmacy-benefit managers to get drugs to employee-members in the most manner. By encouraging the end user to switch to generic drugs, they're able to save the companies and health insurers money -- and ensure that they get a contract for another year.
The pharmacy-benefit managers also help save the end users money by delivering the drugs through mail order. Delivering drugs to the doorstep saves on gas and usually results in a lower copayment. And that makes the patient happy.
Making money by saving others money
Saving other people money can be a good business to be in, but it’s a lot easier sell in times like these. These companies are a pretty diverse bunch, but they should all benefit as health-care costs continue to rise.