WSJ: Major consolidation among HIT vendors likely
The HITECH Act added over $27 billion to an industry whose publicly trading companies' market cap is below that, around $25 billion. Such dramatic expansion of the industry will likely lead to significant consolidation among HIT vendors. We have already seen a merger between Eclypsis and Allscripts this summer (which became final last month); and now Cerner, another leading HIT vendor, entered into a partnership with MedAssets, Inc., a company that has specialized Internet-based financial improvement systems. Via the Journal:
As that funding makes its way to health-care IT companies, it's likely to necessitate a lot more consolidation in an industry that's currently very fragmented. For instance, hospitals are not only looking to reduce the
number of different IT systems they use in-house, they also want more seamless ways of connecting to doctors' offices and insurers."We're at the beginning of the single fastest transformation of any industry in U.S. history," said Glen Tullman, chief executive of the health-care IT company Allscripts Healthcare Solutions Inc. (MDRX). <...> Tullman said he expects a lot more deals to come in the industry. He said that some of that consolidation will likely take place among the companies that provide IT systems to hospitals, a list that
includes Allscripts, privately held Epic Systems Corp., General Electric Co. (GE), Cerner, Germany-based Siemens AG (SI), McKesson Corp. (MCK) and privately held Medical Information Technology Inc., commonly known as Meditech. Tullman declined to comment on what companies he expects to make deals.
You can read more at the Wall Street Journal web site here.
"Health-Care IT Sector Shaking Up As Medical World Goes Digital," Wall Street Journal (October 15, 2010).
Both companies are looking to capitalize on the projected exponential growth in adoption of health IT, in part due to the incentives created by ARRA. According to the Congressional Budget Office, adoption of electronic health records by physician practices is expected to increase from 12% in 2011 to 90% by 2019. 