We at The Motley Fool, like you, spend a lot of time analyzing dozens of revolutionary new drugs and devices on a regular basis. We frequently dive into the pros and cons of the health benefits sector and diagnose the health of the hospital sector, but we often overlook the unsung hero of the health care sector that could be experiencing the quickest growth of all: the health care information technology solution providers.
The 2009 economic stimulus package set the stage, supplying $17 billion in federal grants to the health-care industry to coax companies to move their records, and essentially all of their management tools, into a digital format. For those unwilling or too stubborn to comply, they will face lower reimbursements in the future if the U.S. government feels that its health care standards aren't being met.
All told, this sweeping reform has resulted in a boom for health care solution providers. From health-care-based cloud providers to revenue and payroll management cycle software developers, the boom has gone largely under the radar of many on Wall Street.
For one, the names leading the charge are largely unknowns. When you think of software or cloud computing, you might think of Microsoft or Amazon, two of the best-known solutions providers -- but you likely won't see a huge influence of their products in the health care arena. In fact, one of the most well-known names you probably never knew was a pioneer in leading the digital transition is Xerox (NYSE:XRX). One of the ways Xerox is moving away from enterprise printing solutions has been through supplying digital Medicaid processing services. Having signed an exclusive contract with the state of California, Xerox handled more than 90 million claims totaling $7.5 billion in just its first six months.
But this story goes well beyond the biggest names in technology. There are countless unsung heroes that get lost in hustle and bustle of the constant drug and device research and discovery going on in the sector. Names like Cerner (NASDAQ:CERN) and its Cerner Millenium architecture capture electronic health records at the point of care and act as a cloud for physicians and the pharmacy, as well as the finance department, to view patient information. Cerner is slated to grow sales by 13% this year and 12% next year -- a rapid growth rate for a $15 billion company -- yet only saw its share price increase 17% over the trailing 52 weeks.
Quality Systems (NASDAQ:QSII) is another under-the-radar name I've previously highlighted as a company worth watching. Like Cerner, it provides health care records management services, but also has a suite of software designed for the dental industry, as well as for a hospital's finance department with regard to revenue cycle and payroll management. With all payment and collection record-keeping moving online, Quality Systems is forecast to grow sales by 10.5% annually over the next five years.
I consider Greenway Medical Technologies (UNKNOWN:GWAY.DL) to be another stealth play because of its highly versatile Prime-based software, which provides everything from electronic health records to cloud, mobile, and image capture applications. Greenway has been a rapidly growing play, notching a deal in August with Walgreen (NASDAQ:WBA) subsidiary Take Care Health Employer Solutions to provide complete electronic health records through its PrimeSUITE architecture. If Greenway can continue to garner top-notch customers like Walgreen, investors will overlook its pricey forward P/E of 40 in favor of its projected five-year growth rate of 22.5%.
Do you have a favorite health-care IT solutions provider I've not mentioned? Share it with the community in the comments section below.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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