Smaller Health IT Vendors Likely To Profit From Stimulus Funding

Health IT firms of all sizes expect to benefit financially from the billions of dollars allocated for health IT adoption in the federal stimulus package, the Wall Street Journal reports (Goldstein, Wall Street Journal, 3/24).

Economic Stimulus Package Details

The $787 billion economic stimulus package includes more than $19 billion for health IT (iHealthBeat, 2/18).

Beginning in 2011, physicians who use electronic health records will be eligible for more than $40,000 each in Medicare incentive payments over several years. Hospitals also could qualify for millions of dollars in incentive payments.

Health providers who do not use EHRs by 2015 will face penalties.

Smaller Vendors

Eric Brown, an analyst at Forrester Research, said the labor-intensive requirements of adopting and maintaining EHRs could give smaller vendors an opening to compete with larger firms.

Shares of publicly traded health IT firms -- such as Quality Systems, Allscripts-Misys Healthcare Solutions and Cerner -- have outperformed the overall market this year, the Journal reports.

Meanwhile, earlier this month, Wal-Mart announced that it will begin selling eClinicalWorks EHR packages to medical offices through its Sam's Club stores.

eClinicalWorks, which has 750 employees, expects about $100 million in revenue this year.

The health IT vendor also increased the number of employees it plans to hire over the next few years from 150 to 500 after the approval of the stimulus bill.

Steven Plochocki, CEO of Quality Systems, said that consolidation among health IT vendors is likely and that his company is considering a few acquisitions this year. He added that Quality Systems also is increasing its sales force to address the demand within the health IT community (Wall Street Journal, 3/24).

to share your thoughts on this article.