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Recently, NextGen Healthcare Information Systems, a subsidiary of Quality Systems (QSII - Analyst Report), entered into an agreement with healthcare software solutions provider Clinical Architecture for its terminology integration architecture. The use of Clinical Architecture’s Symedical Server will boost the company’s NextGen Hospital Solutions suite.

The Symedical Server is a software architecture that is capable of managing terminology standards in healthcare. With the use of this software, the NextGen Healthcare Solutions suite will be able to meet the interoperability requirements for Meaningful Use Stage 2 (MU2) criteria and the ICD-10 conversion. Further, the collaboration has led to the development of a terminology management platform to cater to future terminology requirements.

Earlier, NextGen Healthcare Information Systems had collaborated with Florida Blue, the region’s largest health insurer and Availity, a health information network to provide enhanced collaborative coordinated care. QSII’s NextGen Ambulatory EHR system will be used to exchange patient-related clinical information between providers and payers to mitigate potential gaps in care giving.

QSII has a Zacks Rank #3 (Hold). The company’s core Systems business continues to face significant headwinds but the rate of decline seems to have eased somewhat. Despite the positive such as improving pipeline growth, lead generation and lower operating expenses, management needs to address several operational issues to bring the Quality Systems back on track.

Moreover, competition is intense from well regarded players such as Athenahealth (ATHN - Analyst Report) and Cerner (CERN - Analyst Report). Price discounting is frequent, particularly at the lower end, and Software as a Service (SaaS) based model appears to have exacerbated pricing pressure. While fresh projects have shrunk in number, the replacement market is growing.

While we remain on the sidelines regarding QSII, medical information services provider Medidata Solutions (MDSO - Snapshot Report), carrying a Zacks Rank #2 (Buy), is worth considering.

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