The medical industry, as we know it now, is quickly changing, thanks to a $19 billion section of the 2009 stimulus bill.
Titled HI TECH and armed with specific stipulations for the purchase of new electronic health record software, the up-and-coming digital health information industry has grown steadily and strongly, despite the enduring recession.
The Health Information Technology for Economic & Clinical Health (HI TECH), was “designed to create new jobs,” according to Forbes Magazine. And jobs it did create, due to of the influx of money.
Neal Patterson, CEO of Cerner, an electronic health records software company, grew his workforce 20 percent and is opening up a new office to hire 4,000 more employees.
Cerner is one of the top ten companies that makes electronic health records. The company has grown substantially in the last five years. “Last year the company booked $307 million in profits on sales of $2.2 billion. Since Patterson started Cerner in 1979 it has been consistently profitable, and shares have increased at an annualized 22 percent since a 1986 IPO. That’s 11 percent better than the S&P 500 over that 26-year span,” reports Forbes.
Though the bill put an influx of money into this industry, that alone does not explain the current state of growth for companies like Cerner. It also requires hospitals go completely digital by 2015, punishing hospitals that do not purchase software, like Patterson’s, that can cost up to $30 million per hospital. Forbes writes, “Any hospital that doesn’t have ‘meaningful use’ of IT by 2015 will face a cut in reimbursements.”
While hospitals can choose which company they buy from, the firms already on the market providing this software, which include General Electric, Allscripts and Patterson’s Cerner, now have guaranteed customers.
The switchover also would necessitate new hiring and training of IT staff to manage the system.
Epic Systems Corps., another company in the health IT industry, has also fared thanks to this deal. In fact, the CEO, Judy Faulkner, who happens to be a major donor to President Obama, was put on the seat to determine how best to spend the allotted $19 billion.
The Washington Examiner writes: “Faulkner and her company oppose the president’s vision for health IT, but Epic employees are massive Democratic donors. They’ve given nearly $300,000 to Democrats since 2006, according to the Center for Responsive Politics.”
Though the company and Obama diverge on their vision of the future of electronic health records, they were successful in securing a $14 million contract to implement the product for the Coast Guard.
The Examiner writes that “one of the signers, Democratic Rep. Tammy Baldwin, received $27,800 from Faulkner, including $10,000 in contributions to her PAC.”
Both Epic and Cerner are among the top ten vendors electronic health records and are quickly growing. “Only 3.5% of the $2.5 trillion now spent on health care in the U.S. goes to IT, of which 2.6% goes to Cerner,” says Forbes.
The industry is only going to grow over the next decade, with sales projected to double, or even quadruple, to reach nearly $10 billion.
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