With the federal economic stimulus law offering incentives for health care providers to invest in IT systems, the technology vendor Cerner seems poised to reap the benefits, Investor's Business Daily reports.
The stimulus package includes about $35 billion in federal incentive payments to help hospitals and physicians adopt health IT tools, such as electronic health records.
Currently, Cerner products are used in 2,100 hospitals, 3,300 physician practices, 500 ambulatory centers and 1,500 retail pharmacies.
Observers predict that existing customers will continue to purchase Cerner products, particularly as the company rolls out new add-on applications and improvements to existing features.
In addition, the company has access to a promising overseas market. Customers outside the U.S. already account for more than 20% of Cerner's revenue, and the company has a 10-year contract to help automate the U.K.'s National Health Service.
Slow but Steady
Last year, the company took in $1.67 billion in revenue, a 10% increase from the year before.
However, the recession might account for a recent deceleration in the company's financial outlook.
In the first quarter of this year, Cerner's revenue increased by only 2% from the previous year, to $392.3 million. In addition, the company's earnings grew by 11%, compared with 20% to 30% year-over-year profit gains in previous quarters.
Challenges Remain
Although Cerner continues to make steady gains in the health IT market, a few obstacles remain in its path.
First, some health care providers might be hesitant to purchase electronic systems before the federal government issues final criteria on meaningful use of EHRs.
In addition, health care reform legislation might compel health care providers to delay health IT investments while they focus on restructuring.
Finally, other health IT firms could make the market more competitive. General Electric, for instance, has offered to provide no-interest loans to health care providers who purchase its technology (Alva, Investor's Business Daily, 7/2).