Technology companies to enjoy stimulus package funds

Published 10 April 2009

The emphasis of the Obama administration on directing a large portion of the stimulus package toward improving the U.S. infrastructure means the technology companies with the right solutons stand to benefit

Follow the money. More than $30 billion — nearly 10 percent — of stimulus spending will fund technology infrastructure investments. Washington Business Journal reports that spending will allow projects to begin that will serve as the foundation for progressing toward longer-term goals and future reforms the Obama administration hopes to achieve, including lowering the cost of health care, improving national security, and increasing energy independence. The spending represents a large opportunity for several local technology companies that serve the health care, broadband and energy industries.

Health care IT
Amount: $20.6 billion

Doling the cash: Department of Health and Human Services

Goal: Use information technology, including new software and hardware implementations and systems integration, to ensure that all U.S. citizens have electronic health records and insurance, reduce health care costs and administrative errors and improve the quality of patient care.

Contenders: Technology companies that sell to commercial customers in the health care sector and to government agencies have a stake in modernizing the U.S. health care system.

Reston, Virginia-based QuadraMed Corp. is one company that could increase its business as a result of $2 billion worth of financial incentives for the company’s customers as they implement new systems. The company, which provides health information management and other systems to more than 2,000 health care facilities, has asked its board to approve up to a 20 percent increase in its annual research and development spending to ensure all its products meet government certification requirements, said Chris Callahan, QuadraMed’s vice president of product management and strategy.

The 600-employee company, which had more than $137 million in revenue in 2007, also plans to hire 30 to 40 programmers and engineers to meet the increased demand for its products and services.

There is a huge challenge to implement new health IT systems for hospitals as well as the 2,000 private physicians’ offices across the country in the time frame that is being called for, Callahan said. While the outlook for companies such as QuadraMed and its competitors is good, unanswered questions about health IT goals have left company executives uncertain about when they will see sales get a real boost. “All customers need to procure [technology] and demonstrate [its] meaningful use over the next 18 months,” Callahan said. But “we still don’t have a [Health and Human Services] secretary confirmed to determine what meaningful use means.”

The increased demand for services to support new health IT systems, networks and information exchanges also has attracted Chantilly-based federal tech contractor Citizant Inc. The minority, woman-owned small business does about 10 percent of its work in the federal health care sector, up from zero two years ago and recorded revenue of $16 million in 2007.

The company hopes that existing relationships will be the key to winning its share of stimulus-funded projects. Investment in health care modernization is part of the reason Citizant has been working inside the Department of Health and Human Services’ Centers for Medicare & Medicaid Services, said CEO Raymond Roberts. “We’ve been seeing opportunity for the last two to three years” to provide electronic information assurance so health care data is accurate and secure, he said.

Other large federal contractors, such as Arlington, Virginia-based Vangent Inc., Falls Church, Virginia-based CSC, and Perot Systems Government Services in Reston, Virginia, have teams assessing which projects they will bid on. Each has provided health IT services to government agencies in the past.

Vangent, with $558 million in 2008 revenue, has won more than $36 million in recent government awards for health care-related technology services and last month tapped into new opportunities in the sector. The company demonstrated March 23 that its health IT systems are interoperable with Santa Clara, Calif.-based Sun Microsystems Inc.’s technology infrastructure and comply with the requirements of the federal government’s Healthcare Information Technology Standards Panel.

That capability could allow Vangent to compete with companies like CSC and Perot Systems for work on projects building out health information exchanges or network hubs that allow data sharing across organizations at the local, state and federal level.

Broadband build-out

Amount: $7.2 billion

Doling the cash: Federal Communications Commission, National Telecommunications and Information Administration, Department of Agriculture

Goal: Provide broadband Internet access to underserved or unserved regions, increase broadband speeds in serviced areas and increase broadband use in households. Pervasive broadband access could benefit public services providers, the education industry, small businesses, consumers and others.

Contenders: While much of the stimulus money could be awarded to large companies in the telecommunications industry that have the resources to build out broadband networks — such as Comcast Corp., Verizon Communications Inc., Cox Communications Inc. and AT&T Inc. — a number of local companies that sell or use broadband capacity to provide Internet-based services also stand to benefit from this investment through competitive grants.