by David Fessler, Advisory Panelist
Lowering the Cost of Healthcare: Getting Rid of the Doctor’s Manila Folder
Walk into most doctors’ offices these days and you’ll see the crux of the problem: thousands upon thousands of manila folders, each containing a patient’s vital medical record history.
The manila folder is a relic that has its roots in the earliest days of medical record keeping. It’s standard procedure for many older physicians, who are still used to walking around with them, scribbling nearly illegible notes about their patient’s medical condition.
Talk about an antiquated and inefficient medical morass… I asked one of the administrators at my doctor’s facility why the office hadn’t gone to electronic record keeping.
“That’s a really good question,” and she then went on to describe a recent accident: “One time, over a weekend, one of these shelving units collapsed, sending thousands of patient records onto the floor. It took three of us weeks to sort it all out.”
These accidents are waiting to happen all over.
The Obama administration has vowed to fix the manila folder problem, and on February 29, devoted more than $29 billion to healthcare information technology.
Clearly there’s an opportunity at my doctor’s office – and at thousands of other offices like it across the country. It’s one that Quality Systems Inc. (Nasdaq: QSII) is providing a solution to.
The company’s core products get rid of the manila folder problem… and it’s just what the doctor ordered (pun intended): electronic medical record keeping, practice management, and other e-based applications for medical and dental practices.
The company’s QSI Dental System is a customizable practice management system that allows patient scheduling, takes care of accounts receivable, handles billing and various management reports.
Electronic patient records and interfacing with most major dental health insurance companies provide a one-stop solution for oral healthcare professionals. Doctors’ offices enjoy similar advantages over their manila folder counterparts.
But practice management is only part of the problem. Electronic medical record keeping is where upside growth is nearly limitless, and that’s addressed by the company’s NextGen EMR (Electronic Medical Records) product line.
Nearly Limitless Long-term Potential… But a Word of Caution
And many of them have taken the plunge with Quality Systems. It’s stock is up 400% in the last five years, and according to William Blair, the company ranks among the most profitable, and is one of the strongest cash flow generators in the sector.
While the company counts hundreds of doctor’s and dentist offices among its customers, thousands more remain to be converted. And with the recent government incentives to do so, many will take the plunge over the next few years.
It all sounds great, but a word of caution is in order. The company’s valuations are currently in nosebleed territory (particularly in this environment) with the stock trading at a P/E of over 36.
The next earnings announcement isn’t scheduled until June 8th. Given the recent run-up, it’s highly likely a moderate pullback could happen following the announcement, which would be an excellent point to initiate a position.
Good investing,
Dave Fessler
