Fitch: Nascent US Healthcare IT Sector Positioning for Value

NEW YORK--(BUSINESS WIRE)-- Providers in the US Healthcare IT (HCIT) sector are positioning for value as the need for better documentation of medical care and transmission of medical records, cost efficiencies, reduced errors and enhanced security drives growth, according to Fitch Ratings.

Growth in the HCIT sector is being propelled by burgeoning demand for automated and interoperable healthcare IT systems. Increased implementation of electronic health record (EHR) technology, following the inception of the EHR meaningful use program in 2009, has driven innovation and acquisition activity in the HCIT space. Challenges exist in the still nascent sector, however, as standards for health data have yet to be established.

Health information technology (HIT) vendors will look for innovative HCIT companies to offer a more complete suite of services. These innovative targets typically come with a higher price tag and may stretch balance sheets as HIT standards remain undefined.

Private equity involvement may also contribute to the deterioration of balance sheets, as private equity investors have favored this space for its durable cash flow prospects.

The recently announced JV between McKesson's IT business and Change Healthcare will create a scaled player that can offer end-to-end solutions in a reimbursement environment with growing complexity in regards to value-based care initiatives. Deals of size have been ramping up in the space like nThrive, the early 2016 combination of Precyse and MedAssets' revenue cycle management business.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160712006028/en/

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Source: Fitch Ratings

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