With just about everyone, from entertainers to U.S. Congressmen, crossing that invisible line between crassness and civility, why shouldn't the president be allowed to slip a few gratuitous stock picks into one of his health-care speeches? Then again, he doesn't really have to. President Obama has already signaled to investors where he'd put his health-care investing dollars.
Don't go there
I'm sure many executives and investors in major health-care providers such as UnitedHealth Group
Companies that bring new efficiencies into the health-care system have drawn attention from politicians on both sides of the aisle. Many of these companies are small, innovative firms with a huge market opportunity. According to a recent report by PricewaterhouseCoopers' Health Research Institute, the U.S. wastes more than $1.2 trillion of the total $2.2 trillion spent on health care each year. Excessive testing and time spent processing claims top the list of money pits. Depending upon whom you ask, annual savings in these areas could range from mere billions into the hundreds of billions of dollars.
The reform that everyone likes
In particular, the implementation of electronic health records seems almost inevitable. Obama's health IT coordinator, Dr. David Blumenthal, says they could become as integral to medicine as the stethoscope. The government has already set aside more than $20 billion to fund the adoption of electronic records, and the president wants them up and running in five years. To jump-start the process, the government recently announced $1.2 billion in initial grants.
There are undoubtedly huge hurdles to overcome here. A health-care panel I recently attended emphasized the overwhelming cost and scale of converting legacy IT systems. That may be bad for the administration's goals (and taxpayers' wallets), but it's good news for the companies helping hospitals go digital.
Tech companies such as Cisco
Company |
Market Cap |
P/E Ratio |
---|---|---|
Athenahealth |
$1.3 billion |
45.0 |
Eclipsys |
$1.1 billion |
12.4 |
Computer Programs & Systems |
$455 million |
27.2 |
Data from Capital IQ, a division of Standard & Poor's.
Eclipsys and Computer Programs & Systems market to hospitals, while Athenahealth serves smaller medical practices. Athenahealth and Computer Programs & Systems have little or no debt, but fetch high premiums at today's prices. Eclipsys has manageable debt of just more than $100 million, and it trades for the best value of the three.
If these stocks pique your interest, you'll find more promising possibilities from the small-cap analysts at the Motley Fool Hidden Gems newsletter service. One of their latest portfolio candidates is a heavyweight which has been left for dead by the market amid worries about health care reform.
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Fool contributor Dave Mock wants digital records of his grade-school stories that mom tacked on the refrigerator. He owns shares of Pfizer and Johnson & Johnson. Google is a Rule Breakers selection. UnitedHealth Group is a Stock Advisor recommendation. Pfizer, UnitedHealth Group, and WellPoint are Inside Value selections. Johnson & Johnson is an Income Investor recommendation. The Fool owns shares of UnitedHealth Group. The Fool's disclosure policy is all about preventative disclosure.