Allscripts Healthcare Solutions Inc (MDRX), Cerner Corporation (CERN): Obama Treats These Companies to a Double Helping

Any time the federal government enacts major legislation, there are inevitable winners and losers in the corporate world. That’s certainly the case with major laws passed during the first four and a half years of President Obama’s time in office.

The first big piece of legislation the Obama administration passed was the American Recovery and Reinvestment Act, or ARRA. Signed into law in 2009, ARRA spent around $800 billion with the goal to stimulate the economy. The other major victory for the administration was passage of the Patient Protection and Affordable Care Act, or PPACA, commonly referred to as Obamacare. While these bills created varied effects — good and bad — for different industries, a few companies emerged as big winners from both ARRA and PPACA.

High fives for HITECH
ARRA spread that $800 billion or so around in lots of different ways. One important part of the legislation was the Health Information Technology for Economic and Clinical Health Act, or HITECH. The feds allocated almost $26 billion with HITECH to foster the adoption of health information technology by health-care providers, especially hospitals and physicians.

HITECH created financial incentives for health-care providers to achieve “meaningful use” of electronic health record, or EHR, systems. Medicare pays up to $44,000 over five years for providers that implement certified EHR systems. After 2015, Medicare also will impose financial penalties on hospitals and doctors that don’t adopt certified EHR technology.

As you might expect, large EHR systems vendors enthusiastically welcomed passage of HITECH. What company wouldn’t enjoy having the government pay customers to buy its products and fine them if they didn’t? Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) reported total revenue of $548 million in the fiscal year ending in May 2009. At the end of 2012, the company’s annual revenue topped $1.4 billion — thanks in no small part to Uncle Sam.

Cerner Corporation (NASDAQ:CERN) stands out as another big beneficiary of the government’s helpful hands. In March 2009, the big EHR vendor reported revenue of $1.67 billion. By the end of last year, Cerner Corporation (NASDAQ:CERN)’s revenue had jumped to over $2.66 billion.

Smaller EHR vendors profited from HITECH, also. Quality Systems, Inc.(NASDAQ:QSII) saw its annual revenue climb from $245 million in mid-2009 to over $460 million in 2012. Cloud-based software company athenahealth, Inc (NASDAQ:ATHN) chalked up revenue gains of over 200% since early 2009.

Helped by Obamacare
While these companies were raking in the cash, the folks in Washington worked on the other big bill to affect health care — Obamacare. Hospitals appeared to be the most obvious winners from the health-care reform law, although some doubts have arisen about just how much hospitals will actually benefit. At least on the surface, the EHR vendors didn’t seem to be affected too much by Obamacare. However, one focus of the law could benefit some of these companies.