Honeywell International Inc. (HON), Alere Inc (ALR): The Fight To Self-Insure

To get an example of bottom-line savings due to self-insurance, you wouldn’t have to look further than Freehold Township, New Jersey. Rather than risk rising premium costs of an average of 20% year-over-year, this municipality is banking on the transparency and control of underlying costs, keeping savings for the township at $500,000 to $1 million per year.

The Investment Opportunities

One of the essential components self-insured companies use to control their healthcare costs is employee health monitoring. Providers of health monitoring services and devices stand to benefit greatly from companies seeking to self-insure. Since the flight to self-insurance has increased, the demand for monitoring services has increased as well.

Companies seeking cost control as it relates to healthcare regulations may flock to General Electric Company (NYSE:GE)’s Healthcare IT. This growing branch of GE provides comprehensive clinical and financial information technology solutions to its customers, resulting in member-employee population transparency. The transparency provided by General Electric Company (NYSE:GE) Healthcare’s information technology service is essential for determining coverage adjustments and costs. The monitoring service provided by General Electric Company (NYSE:GE) integrates with their expansive array of healthcare products, giving a large reach into the growing market for healthcare monitoring.

Honeywell International Inc. (NYSE:HON)’s HomMed is also a major player in this field of advanced remote monitoring solutions for the self-insured care provider. Currently, they have over 70,000 monitors deployed, and that number continues to grow. They are one of the few companies offering complete solutions for remote patient monitoring from tele-health to tele-care, including remote patient management applications, patient decision support, and evidence-based disease management. This division of Honeywell International Inc. (NYSE:HON) has been around since 1999, and will become more prominent with the new move away from Obamacare regulations.

Another investment opportunity rests in Alere Inc (NYSE:ALR). Alere Inc (NYSE:ALR) is the smaller New York Stock Exhange healthcare solutions provider detailed in this article, but is a formidable competitor to General Electric Company (NYSE:GE) Healthcare IT and Honeywell International Inc. (NYSE:HON) HomMed nonetheless. They offer comprehensive chronic care programs designed to increase patient compliance to doctor’s orders, quality of life programs, and workplace productivity measures. All of Alere Inc (NYSE:ALR) programs are designed to increase quality of life standards, resulting in healthier members of their client’s coverage universe and lowered costs.

Small companies like Activecare Inc have reaped significant revenue gains in the self-insurance market by signing up businesses along with local and state governments, to be a provider of health monitoring services for their employees participating in their self-insured healthcare benefits. ActiveCare’s health monitoring service is a comprehensive solution via real-time monitoring and testing of patient members who unmonitored, would otherwise pose a significant risk in expense in future treatment.

Current data shows that a diabetic who is monitoring his or her blood glucose levels daily-and is accountable for the results-generally costs a  health insurance provider approximately $40,000 per year, according to Bryan Dalton of ActiveCare. With the ActiveCare cellular monitoring device, the insurer can see whether or not the patient member will become a bigger issue down the road and thereby bringing light to a situation where not only will the patient member become sicker, but also cost the insurer over $500,000 per year due to necessary kidney transplants and supplemental medication and hospitalization.

The businesses providing the technology to ensure controllable healthcare costs stand to profit greatly over the final years of President Obama’s administration. In spite of the Dow crossing into record territory this week, there is arguably a tremendous upside for these companies and their shareholders as the flight to self-insurance accelerates. As the climate on Main Street shifts due to the changes from Pennsylvania Avenue, we will see even more businesses like ActiveCare and Alere Inc (NYSE:ALR) cash in on the flight of businesses from the blue shields of the 20th century to the raised fists of autonomy in the 21st

The article Finding the Needle of Opportunity in a Haystack of Obamacare originally appeared on and is written by Michael Mandala.

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