A "Healthy" Reduction in Paperwork
07/01/2005 12:00 am EST
Jim Collins has been investing since 1956. With a focus on relative strength and other quantitative measures, he manages about a billion dollars and publishes several excellent newsletters. Here's his latest featured stock, a play on automating medical paperwork.
"Cerner (CERN NASDAQ) is a leading supplier of healthcare information technology, providing end-users secure access to clinical, administrative, and financial data in real time. The company's solutions are employed to reduce and eliminate the errors and inefficiencies that occur through paper-based record keeping and correspondence. Its solutions are designed using the proprietary Millennium architecture, a state-of-the-art technology infrastructure that combines clinical, financial, and management information solutions.
"In total, the company offers more than 50 different applications. It provides access to an individual's electronic medical record at the point of care and organizes information for the specific needs of the physician, nurse, laboratory technician, pharmacist, or other care provider, as well as for front and back-office professionals. The firm's systems also provide prescription administration and documentation. Computerized physician order entry enables physicians to order medications, diagnostic tests, and treatment plans, as well as offering decision support tools to determine if orders are in line with standards and appropriate for the person's individual situation.
"In January, Cerner acquired the medical division of VitalWorks, a leader in the private physician market. This transaction expands Cerner's presence in an area, which is expected to increase considerably as the federal government continues its push to bring medical information to the point of care. This acquisition, which adds 3,500 physician practices, builds on Cerner's already substantial hospital-affiliated physician client base, giving it additional reach across the entire spectrum of the $4 billion ambulatory market.
"We caution that the market for healthcare information systems is intensely competitive, rapidly evolving, and subject to rapid technological change. In addition, several of its software solutions are considered medical devices, which are actively regulated under the FDA. Technically, the stock reached an all-time high in late May before retreating modestly. The company has a relative strength rating of 92 and an A minus rating for accumulation and distribution."