Alabama Players in the Fastest Growing Health Care IT Sector

BY KATHY HAGOOD
        While many industries are ailing in this economy, the health information management and technology sector is thriving. And it’s expected to go through a significant growth spurt after certification guidelines for $19 billion in provider incentives through the American Recovery and Reinvestment Act of 2009 are clarified in the coming months.
        Physicians, hospitals and other health care providers that treat a certain percentage of Medicare or Medicaid patients are required to use certified electronic health records “in a meaningful way” to receive economic stimulus funds. The incentive monies in effect would serve as a rebate on the costs of health IT systems.
        Early adopters of the technology will get the most incentive payments, which will be offered over a five-year period, and those who don’t adopt a certified electronic record system will be penalized with reductions in their Medicare fee schedules beginning in 2015.
        Additional stimulus funds have been appropriated for use in community health centers, including for the acquisition of health IT systems.
        Alabama is home to several successful health information management and technology companies poised for significant revenue growth because of the stimulus funding.
        Computer Programs and Systems Inc. (CPSI), a Mobile-based health information management company, for example, focuses on the community hospital market. It serves more than 650 hospitals in 47 of the 50 states.
        The publicly held company was founded in 1979 and has experienced steady growth in recent years. CPSI added 200 employees in 2009 for a total of 1,087 workers. Gross revenue for 2009 was $127.7 million, up from $120 million in 2008.  Net income for 2009 was $15.2 million.
        The CPSI health IT system includes four phases: accounting and human resources, clinical applications, nursing point of care and physician applications. While all the company’s clients have adopted the first phase, many have yet to adopt the final three phases. Federal stimulus funds are expected to motivate the company’s client hospitals to add phases as well as bring in new client hospitals.
        “We do expect to benefit from the stimulus funds. To what extent remains to be seen,” says J. Boyd Douglas Jr., CEO and president of the company.
        Two other well-established health information management and technology companies, Medisys Inc. and Electronic Healthcare Systems Inc. (EHS), have offices in the Birmingham area.
        Medisys, which primarily markets itself in the Southeast, serves more than 1,000 physician clients in Alabama alone. The privately held company got it start more than 20 years ago by supporting Blue Cross and Blue Shield of Alabama.
        With administrative offices in Gardendale and a software development operation in Montgomery, the company currently employs 75 workers.
        The Medisys product line includes practice management, electronic health records, information and billing services, and ePrescribe.
        “We’ve continued to expand because we’ve been able to respond to changes in the marketplace by upgrading and enhancing our own software,” says Nancy Ellis, Medisys vice president.
        While final guidelines for electronic health record certification have not been approved, Medisys, like CPSI and EHS, has preliminary approvals. The companies will be able to alter their software systems if need be, their representatives say.
        Ellis says Medisys plans to provide stability for its customers by keeping its operations in Alabama.
        “We’ve seen a number of health information management companies start up and then sell out to national companies. Medisys is one of the few in the state with longevity,” Ellis saus.
        One example of a company that started in Alabama and left is Emageon. The enterprise was created in 1997 in Birmingham based on medical image management system research at University of Alabama in Birmingham Medical Center.
        Emageon, well respected for its radiology and cardiology IT solutions, became a publicly traded company in 2005. In later years Emageon began posting losses.
        Last April Boston-based AMICAS Inc., which provides radiology and medical image and information management systems, acquired Emageon for $39 million to round out the AMICAS product line. Emageon’s Birmingham office was closed as part of the consolidation.
        Another long-running Alabama-based health information management company is EHS, which was founded in1995. The privately held company employs 150 in its Birmingham operation.
        Although company representatives would not reveal revenues, they said the company has grown by about 20 percent in the past year.
        “We’ve been rapidly expanding and have been in a hiring mode,” says Alan Jones, director of marketing.
        The company has clients in 48 states and the U.S. Virgin Islands. It services 102 clients in 155 locations in Alabama alone, says David Turner, vice president of sales and marketing for the company.
        One of the companies specialties is health IT systems for community health centers. The centers, which serve low-income patients and those without insurance, are governed by extensive federal guidelines.
        “We believe we’re in an excellent position to take advantage of an increase in demand because of the stimulus funds,” Turner says. “We have an online training system, for example, which will allow us to expand our client base without being overwhelmed by the need to train our new customers.”