As healthcare costs balloon and the population gets older, there is a
long-term need for new innovations. Allscripts (MDRX)
is one such company that is leading the charge.
The company develops a software product called TouchScript. Basically, it
allows physicians access to information about patient history and benefits
at the point of care, using a handheld (Hewlett-Packard CE device). Thus,
physicians can make more informed decisions.
The company was founded in 1986 and as a result, originally used
traditional means to distribute pharmaceuticals. But with the advent of
the Web, Allscripts is rapidly moving towards an e-commerce model.
The market is huge, of course. Pharmaceutical sales are $100 billion in
the US and $300 billion worldwide. Despite the large base, sales are still
growing rapidly, at about 10 percent per year.
Allscripts Solution
Allscripts is transferring power to the physician. After all, it is the
physician who is closest to the patient and can make the best
determinations as to what is appropriate. For example, while diagnosing a
patient, a physician can input the relevant information in a computer
device, get the necessary background information on the patient and then
instantly send orders to purchase prescription drugs.
Allscripts uses
McKesson as a pharmaceutical wholesaler. The products are then shipped to
an Allscripts 61,000 foot distribution facility in Libertyville, Illinois.
The facility is state-of-the art and has 93 control checks so as to assure
quality. No other company provides such a turnkey service.
Results
A critical deal was with Kinetra LLC, which provides Net connectivity
services to physicians and payers. In the five-year agreement, Allscripts
will become the exclusive provider of electronic prescription services for
the physician and managed care segments. Kinetra has about 75,000
physicians in its network.
The agreement should have a substantial impact on the top-line for
Allscripts. The revenue model calls for: hardware fees, software
licensing fees and e-commerce.
In fact, the company has been showing strong growth in its e-commerce
revenues. In the latest quarter, revenues were $2.9 million, which was up
703.3 percent from the same time last year.
But what has given impetus to the stock is a recent executive memorandum
signed by President Bill Clinton. A task force will be created to find
ways to reduce medical errors by using technology like that from
Allscripts. Between 44,000 and 98,000 patients die each year because of
errors. One of the biggest reasons is illegible writing.
So, within the next few years, expect physicians to use handheld devices to
digitally provide patient care, which should be very good news for
patients, as well as Allscripts.
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