It is no secret that we have an aging population, and it requires more and more hospital treatment, whether it is inpatient or outpatient. Most importantly, this is a trend that is going to go on for some time, until the demographics swing back some. Add in a very bureaucratic Affordable Care Act, and hospitals around the United States are dealt a very difficult information technology hand.

In a new research report, while Baird concedes that hospital requests for proposals (RFPs) did not take off, and they were in fact below last year, they are generally stable, and that is an overall positive. RFPs are required in most states for government-owned hospitals, and the Baird team sees the data as a solid indicator for future health care information technology (IT) spending.

The analysts at Baird have three preferred ideas for investors to consider. While they may not be momentum, biotech-type alpha home runs, they are probably just the ticket for growth portfolios looking for sector exposure.

Athenahealth

This top stock was hit hard early this year, and while it has rebounded, it still offers a solid entry point. Athenahealth Inc. (NASDAQ: ATHN) provides cloud-based services and mobile applications for medical groups and health systems.

The company provides services through athenaNet, a cloud-based platform. Its services include athenaCollector, a cloud-based revenue cycle management and practice management service; athenaClinicals for electronic health record management; athenaCommunicator, a cloud-based patient engagement and communication service; athenaCoordinator for order transmission; and athenaCoordinator Enterprise for care coordination, patient access and order transmission service.

The company also provides athenaCommunicator Enterprise, a cloud-based population health management service to execute, track and coordinate care across a provider’s network, and Epocrates, a service that includes clinical information and decision support services in the areas of drug and disease information, medical calculator and tools, clinical guidelines, clinical messaging, market research and formulary hosting. In addition, it offers client support, account performance monitoring, relationship management and real-time performance monitoring services.

The Baird team thinks that the company can sustain close to 20% revenue growth for 2016 through 2017, and they view the company as one of the very best health care IT stories now. With shares trading at the lower end of historical ranges, the value at current levels looks compelling.

The Baird price target for the stock is $185, and the posted Thomson/First Call consensus target is much lower at $155.50 The stock closed most recently at $140.04 per share.
Allscripts

This is another company that was buried at the beginning of the year and is starting to fight its way back. Allscripts Healthcare Solutions Inc. (NASDAQ: MDRX) provides IT and services to health care organizations in the United States, Canada and internationally. It offers electronic health records, connectivity, hosting, outsourcing, analytics, patient engagement, clinical decision support and population health management solutions.

The company’s Clinical and Financial Solutions segment provides integrated clinical software applications and financial and information solutions, which primarily include electronic health record (EHR) related and financial and practice management software solutions, as well as related installation, support and maintenance, outsourcing, hosting, revenue cycle management, training and electronic claims administration services.

Top Wall Street analysts have noted that the growing adoption of Allscripts’ population health management and EHR solutions bodes well for the company’s overall prospects. The company’s solutions have been selected by the likes of University Hospitals. Moreover, its partnerships with AssistRx, Catholic Health Initiatives and Garmin are expected to drive the top line going forward.

The Baird price objective for the stock is $17, and the consensus price target is set at $15.34. The stock closed most recently at $13.95.

Press Ganey

Somewhat off the radar of many investors, this company looks to be breaking a downtrend line and could be set up for a solid move higher. Press Ganey Holdings Inc. (NYSE: PGND) provides patient experience and caregiver measurement, performance analytics and strategic advisory solutions for health care organizations in the United States.

The company offers patient experience solutions for measuring and analyzing data collected directly from patients, including patient experience insights measured through paper, phone, mobile and other electronic modes, and caregiver engagement solutions comprising physician, nurse and, employee alignment and engagement solutions.

The company also provides clinical and quality solutions, such as Nursing Quality Indicators, a program that collects data on a set of nursing-sensitive process, structure and outcome measures for clients; patient reported outcome measure solutions to capture patients’ perceptions of the impact of medical care on their functional status and life; and software data collection solutions that enable providers to track, submit and analyze data on core measures.

Baird has a $36 price target on the stock, and the consensus target is $34.81. Press Ganey shares closed on Wednesday at $29.78.

Super-exciting they are not, but these three companies reside in an industry that despite the warts of the overall health care system are poised for continued solid growth. They are good additions to long-term growth portfolios.

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