The accompanying table presents statistics and the Top 5 rated companies in the ETF Innovators (ETFI) Global Health Information Technology (Health IT) Index, which is structured to include companies with market caps between $50M - $10B. The rating system is based on a formula which considers each company's market cap weighting, net income weighting, and historical stock price returns and the index is equally-weighted among all 52 companies, which is dominated by small-caps with an average market cap around $600M.
As a new ETF idea, the Top 30 Rated stocks would be chosen as active components and rebalanced each quarter on a semi-active basis. Over the past year, the Health IT Index has outpaced its benchmark ETFs, including Vanguard IT (VGT), Healthcare Sector SPDR (XLV), and Technology Sector SPDR (XLK). Other major companies in the Health IT Index included in the Top 30 Rated include Cerner (CERN) and Eclipsys (ECLP).
The Top 5 Rated companies include Quality Systems (QSII) – NextGen electronic medical records system, CardioNet (BEAT) – CardioNet System for real-time, outpatient heart rhythm monitoring, Computer Programs & Systems (CPSI) – hospital information systems, SXC Health Solutions (SXCI) – pharmacy benefit management + transaction sytems, and Allscripts-Misys (MDRX) – electronic prescribing (e-prescribing), medical records, and health information systems.
Starting in January, Medicare will offer a financial incentive for doctors to embrace e-prescribing and begin imposing penalties in 2012 for those who continue to scribble their drug orders on paper – with the goal of reducing medication errors and improving efficiency. As a retail pharmacist, I currently process less than 1% of daily scripts by e-prescribing, but the system works well and is more efficient and safer than having patients drop of their handwritten scripts.
First, there is no need to decipher sometimes challenging handwriting which can result in medication errors. Also, e-prescribing is more efficient since the scripts can be transmitted at the point of patient care and processed before they arrive rather than dropping off their script and waiting for it to be filled. Although the number of e-scripts is currently low, many prescribers already utilize computer-generated scripts, which can easily be adapted to electronic transmission.
Another potential boon to Health IT companies is the potential for a substantial investment in the industry as part of plans for
healthcare reform to improve the quality and efficiency of care.
