Expectations for the federal stimulus package have fueled a rise in stock prices for many health IT companies, despite the ongoing recession, according to a new report by Healthcare Growth Partners, Modern Healthcare reports.
The report, titled "Q2 2009 Healthcare IT Transaction Summary," found that health IT stocks outperformed many other sectors of the economy this year. The industry had a 30% gain compared with the Standard & Poor's 500 index, which rose by 2%.
In addition, several health IT firms posted higher second-quarter stock prices this year compared with the end of 2008.
Christopher McCord, principal of HGP, said the stock prices reflect an assumption that the federal economic stimulus package's health IT provisions will compel health care providers to purchase electronic health systems during the next several years.
Jason Baker, managing director of HGP, added that the stock prices are "clearly based on future expectations" because they do not reflect the firms' current financial performance.
The report also noted that 48 mergers and acquisitions occurred in the health IT industry during the second quarter this year, compared with 56 during the same period in 2008. The analysts said the recession likely accounted for the drop in company transactions (DerGurahian, Modern Healthcare, 7/30).