Irvine’s Quality Systems Inc. and other healthcare information technology companies should have a strong 2005, even with cuts in federal funding and pending leadership changes at the Department of Health and Human Services.
“We believe growth in the healthcare IT industry is being driven from within,hospitals, physicians and (payers) recognize both the cost savings and quality improvement driven by investments,” said Sean Wieland, an analyst with San Francisco-based WR Hambrecht & Co., in a report.
Contract wins for healthcare information technology companies, Wieland wrote, “are strong across the hospital and ambulatory markets, driven by (products) that are proven to reduce costs, drive revenue and improve the quality of care.”
Wieland said he doesn’t see the resignation of Department of Health Secretary Tommy Thompson and the confirmation of his likely replacement, Mark McClellan, as having significant implications for healthcare technology.
McClellan runs the federal Centers for Medicare and Medicaid Services and “is as avid a supporter of the proliferation of IT in healthcare as Secretary Thompson,” Wieland said.
One disappointing note: Congress passed a $388 billion spending bill that didn’t include $50 million for the Office of National Health Information and its technology coordinator, Dr. David Brailer. The Bush administration was hoping to funnel the money toward technology demonstration projects.
Shares of Quality, which makes software to help doctors and dentists manage their practices, are rated a “buy,” according to Wieland. He has a price target of $65 on the stock, 7% higher than in mid-December. Quality’s stock was up 35% in 2004.
Other competitors seen growing this year include WebMD Corp. of Elmwood, N.J., Kansas City-based Cerner Corp. and Allscripts Healthcare Solutions Inc. of suburban Chicago.
In a Heart Beat
Cardiac Science Inc. stepped in when the University of Wisconsin Police Department was stuck with two dozen defibrillators made by a competitor that were recalled in November.
The police department spent $29,520 to buy 24 of Irvine-based Cardiac Science’s defibrillators, which deliver tiny electric shocks to people whose hearts are in cardiac arrest, according to the Capital Times newspaper of Madison, Wis.
The department found itself in a bind when Access CardioSystems of Concord, Mass., issued recall notices on some of its automated external defibrillators. The defects caused the devices to be unusable.
Access CardioSystems subsequently said it was shutting down its operations making any fixes to the faulty devices impossible.
University of Wisconsin police had spent $36,000 to buy 24 Access CardioSystems defibrillators this past summer. The Wisconsin Department of Administration was hoping to recoup some of the money, possibly in a class-action suit against Access, but wasn’t hopeful, according to the newspaper.
Trestle Takeover
Irvine-based Trestle Holdings Inc., which makes digital imaging devices and software, plans to buy Wexford, Pa.-based Interscope Technologies Inc. in a stock deal.
Terms weren’t disclosed.
Interscope develops software to improve studies of clinical and biopharmaceutical diseases. It also makes data management software.
Trestle’s devices let doctors and other healthcare workers examine, diagnose and treat patients from remote locations. It plans to incorporate Interscope software in its products.
Separately, Trestle said that West Parry Sound Health Centre, a network of healthcare facilities covering 70,000 members in Canada’s Ontario, is using its MedMicro Internet microscopy product.
MedMicro uses personal computers to connect microscopes to the Internet, enabling users to view slides remotely.
Life Changing
LifeMasters Supported SelfCare Inc., an Irvine-based disease management company, won a three-year deal to run a diabetes and congestive heart failure program for Medicare beneficiaries in Chicago and the state of Oklahoma.
The company’s program includes nursing help and coaching to help change patient behavior in a bid to improve health and cut trips to the emergency room.
The federal Centers for Medicare and Medicaid Services selected LifeMasters to handle the project, which was created by 2003’s Medicare Modernization Act. It’s one of several regional chronic care improvement programs targeting cost cuts and health gains.
In other LifeMasters news, the company signed a deal with Bluegrass Family Health of Kentucky to provide disease management services to about 136,350 of its managed care members.
The deal calls for Bluegrass Family Health’s commercial plan members, as well as Kentucky state employees with diseases such as heart failure, diabetes and low back pain, to have access to LifeMasters’ disease management services.
Bits and Pieces:
I-Flow Corp., Lake Forest, said it inked a deal with the Beverly Hills Surgical Institute to use its On-Q PainBuster pain relief system. The surgical institute is a doctor group with 11 facilities in Southern California … QS Labs Inc., Irvine, hosted a forum on the withdrawal of Merck & Co.’s Vioxx arthritis drug from the market last month. Eric Sun, QS’ chief executive and a former Food and Drug Administration investigator, and Tom Taulli, a corporate lawyer who belongs to QS’ advisory board, were among the panel’s participants.
