Gene Mannheimer joined Auriga USA, LLC, in September 2008 to cover the health care IT sector. His experience in health care IT spans 20 years, including 10 years as a Research Analyst following the health care IT and services sector.

1. Information Technology Companies Benefit From A Clearer Outlook For
U.S. Health Care And Reduce Upfront Costs For Care Providers
Gene Mannheimer joined Auriga USA, LLC, in September 2008 to cover the health care IT sector. His
experience in health care IT spans 20 years, including 10 years as a Research Analyst following the health
care IT and services sector. He was also a Senior Analyst at Jefferies Broadview, specializing in mergers
and acquisitions of IT companies. Mr. Mannheimer holds a B.S. in economics from the Wharton School,
a Bachelor of Applied Science in Systems Engineering from the University of Pennsylvania and an MBA in
finance from the University of Southern California.
TWST: What about the cost? There is some stimulus money, as we discussed, but for the smaller
practices, for example, is this a daunting cost to implement the new IT?
Mr. Mannheimer: That's a great question, and certainly the cost can be prohibitive. That's probably the
biggest obstacle to adoption of electronic medical records - is cost. Especially when you consider that
50% of physicians, half the population, practice in physician offices with fewer than 10 doctors. This
segment is very sensitive to price, and that's why many of the legacy EMR products, those offered by GE
(GE), Quality Systems (QSII) to name two, are just cost prohibitive. These things cost maybe $10,000 per
physician, and the doctors don't have the capital put upfront or they don't see the value proposition.
That has been well demonstrated and documented into the cost issue.
You have a lot of newer models today which are very exciting, like those offered by athenahealth
(ATHN), Greenway (GWAY) and Allscripts (MDRX), is now starting to see about 25% of their bookings
come from SaaS subscription-based delivery, where you pay virtually nothing upfront, but it's more of
a pay-as-you-go model, and that's much more palatable to the physician's pocketbook as they don't
have to lay out money upfront. The market is getting more creative in ways just to reach the small
physicians in the small doctor office. So now instead of paying $10,000 upfront, you may be only paying
$400 and $500 monthly to use and lease an EMR. They're much more receptive to that at the lower end.
TWST: Should investors look at including health IT in their portfolio right now?
Mr. Mannheimer: Without question, they should. In these precarious markets where you've got an
election year and uncertainty about which way health care is headed, you can look to health IT for two
reasons. One is it has the government stimulus behind it, which should not get derailed because that's
received bipartisan support - George Bush's administration initially started the health IT initiative, and
President Obama really expanded on that and put a lot of money behind that. So it's got bipartisan
support, it shouldn't get derailed. And health care is a relatively defensive sector.
The second reason to include health IT is that the sexy, higher-growth characteristics of software
companies are here as well. These companies are essentially software companies that target the
health care vertical. So you have the growthy aspects of a tech company combined with the defensive
characteristics of the health care industry. I would say it's a great place to put money, but you have to

2. be sensitive to valuation. So that's why, say, if you're looking five years out, you just buy these names
and hold them, because many of them get consolidated and acquired at a nice premium. But if you're
more near-term oriented, some of the multiples have gotten ahead of themselves and you might look
for pullbacks therefore getting involved. That's how I would couch it.
--------
Source: http://lark.twst.com/yagoo/mannheimerJK2.html
This is what we feel:
Acroseas strongly believes that cost in isolation will not be the prime determinant, but a combination of
‘sheer value proposition’ and cost will contribute towards the outlook of this industry in the next 3 to 5
years