HITECH Boosts Health IT Stocks

After a frightening free-fall in Q4, 2008 most domestic stock indices regained their footing in the first 6 months of this year. The Standard & Poor's 500 index was up a modest 2% for the period, for example.

Health information technology stocks blew past this performance however, as the sector gained 30% on speculation that HITECH funding would soon lead to a bonanza for the sector.

Allscripts-Misys stock was trading at $15.86 at the end of Q2, 2009, up from $9.92 at the beginning of the year. Similarly, Cerner’s stock was trading 38% higher than on January 1.

HITECH, a part of the American Recovery and Reinvestment Act of 2009, mandates that at least $20 billion to be paid-out via Medicare bonus incentives to providers who demonstrate “meaningful use” of certified EHRs beginning in 2011.

Although prospects for the sector continue to look favorable, Christopher McCord, a principal of Healthcare Growth Partners voiced some concern. “Meaningful use still needs to be better understood,” he told Modern Healthcare.

In this regard, ONCHIT’s HIT Policy Committee remains on track to release final definitions for the key concept by this fall.

Also later this year or by Q1 10 the latest, ONCHIT will designate EHR certifying bodies. Currently, CCHIT has a monopoly on EHR certification but no one—including CCHIT itself—expects this to continue.

As for health care providers themselves, they will likely continue to push for implementation delays on certain aspects of the “meaningful use” guidelines, but they’re not going to turn their backs altogether on the $20 billion windfall.

Glenn Laffel MD, PhD, Sr. VP Clinical Affairs