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In an effort to provide greater flexibility to health care customers, Walgreen (WAG - Analyst Report) recently started installing WellHealth EHR, the electronic health record (EHR) solution from Greenway Medical Technologies, Inc. , a player in the health care information technology (HCIT) market. The drug retail giant has already deployed the EHR in over 200 of its stores and plans to introduce it across 8,000 locations by the summer of next year.

As a part of Walgreen’s HealthCloud initiative, the EHR solution will help the company transform its traditional drugstores to health and daily living destinations. Working as a single patient view of Walgreen, the WellHealth EHR will provide the latest patient immunization and health testing information, along with pharmacy information irrespective of where the patient received the service. The two parties entered into a partnership in 2010 when Walgreen first deployed Greenway’s PrimeSuite in Walgreen’s worksite health centers for primary and acute care.

With the recent verdict of the Supreme Court upholding the Patient Protection and Affordable Care Act of 2010 (PPACA) (also known as Obamacare), the U.S. health care industry is making an all-out effort to rope in hospitals, doctors, pharmacists and others through the EHR and electronic medical records (EMRs).

The recent data shows that the number of hospitals using health information technology (IT) has more than doubled in the last two years. Moreover, nearly 2,000 hospitals and more than 41,000 doctors have received $3.1 billion in incentive payments for ensuring ‘Meaningful Use’ of health IT, particularly, certified EHR. The incentives will be offered for a period of 4–5 years, after which physicians will be penalized for not adopting proper measures.

Notably, “Meaningful Use” is a criterion specified under the EHR incentive program, which is designed to stimulate the use of technology in healthcare. Funded by the HITECH Act, the program enables providers to adopt EHR and meet Meaningful Use needs in order to earn reimbursements and avoid Medicare penalties.

We believe that Walgreen is well placed to gain a meaningful share of the multi-billion dollar American Recovery and Reinvestment Act (ARRA)-related healthcare information technology investment opportunity. We have a long-term Neutral recommendation on Walgreen. The stock currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

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