Along with voice-recognition technologies from Nuance Technologies which I discussed in a previous article, Cerner’s Millennium and Health Facts solutions will form the backbone for its EHR software. The software unifies patient records on a single platform to improve the efficiency of practices.
Keep an eye on IBM and Accenture
Although Hewlett-Packard Company (NYSE:HPQ) and Cerner’s partnership should prove fruitful for both companies, two other competitors to keep an eye on are International Business Machines Corp. (NYSE:IBM) and Accenture as they are both major players in the data analytics business.
IBM’s most impressive achievement in health care is Watson, the first artificial intelligence medical assistant. Watson received the training of a second-year medical student and “digested” patient records, histories, and research at the renowned Memorial Sloan-Kettering Cancer Center. Through that training, Watson became a medical assistant that could provide treatment options with varying degrees of confidence to clinicians. In other words, while companies like Cerner are accelerating data analytics to enhance EHR software, IBM is using data analytics to fuel the growth of artificial intelligence.
IBM does not report health care revenue separately from services and software, but its 3.3% decline in revenue shows that it is facing similar headwinds as HP in the global enterprise business.
Accenture Plc (NYSE:ACN), a diversified management consulting, technology, and outsourcing company, also recently expanded its footprint in health care IT by acquiring ASM Research, a provider of IT services to U.S. defense and federal health clients. The acquisition is aimed at strengthening U.S. federal health capabilities for military personnel and veterans.
Although the ASM purchase should boost Accenture’s top line in the long run, the company suffered last quarter from its broad diversification. Accenture’s revenue only edged up 0.7% from the prior-year quarter to $7.2 billion, missing the consensus estimate of $7.47 billion. Certain businesses including health care and financial services grew, but others declined and offset those gains.
A Foolish final thought
Although the world of health care IT is growing, it’s not a 100-meter dash to the finish line. The effort to modernize hospitals through faster data analytics, streamlined EHRs, ICD-10 updates, and better wireless networks will be a long, grueling marathon. Investors should expect sluggish, single-digit sales growth from most of these companies over the next few years. Long-term growth should remain positive as they secure more contracts, however.
As seen with HP and Accenture, exposure to other businesses can be a drag on stabilizing or growing their data analytics businesses. Therefore, investors who want better exposure to the growing health care IT market without the unwanted weight of slow-growth businesses should stick with dedicated health care IT companies like Cerner instead.
The article Analyzing HP’s Data Analytics Deal With Cerner originally appeared on Fool.com and is written by Leo Sun.
Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Accenture. The Motley Fool owns shares of International Business Machines (NYSE:IBM).
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