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Healthcare information technology (HCIT) solutions provider Cerner Corp (CERN - Analyst Report) and medical technology company CareFusion (CFN - Analyst Report) recently announced the implementation of interconnected systems at the well-regarded teaching and research hospital Penn State Milton S. Hershey Medical Center.

The systems which share data will improve medication management at the Magnet organization, Penn State Hershey.  The latest offering by CareFusion and Cerner allows data sharing and assimilation of clinical information between the automated medication dispensing technology of CareFusion’s Pyxis MedStation 4000 system and the Cerner Millennium electronic health record (EHR) system, via Cerner's CareAware iBus integrated device connectivity architecture.

The features of this joint offering will improve standards of care by reducing time and enhancing efficiency of medication dispensing. The integration of these leading technologies underlines the strategic initiatives of CareFusion to reform medication management.

Earlier in 2010, CareFusion and Cerner inked a strategic agreement to develop solutions to improve quality of care via interoperability and system connectivity, on the back of amalgamation of the pioneering technologies. The integration allowed CareFusion to unify its Pyxis medication technologies, Alaris infusion pumps and Ventilation systems with Cerner’s CareAware iBus and Cerner Millennium.

Cerner continues to extend its existing broad footprint in the domestic market. Such integration is expected to allow the company to gain hospital deals. Cerner remains the trend setter among pure-play, publicly traded healthcare IT (HCIT) vendors. Its second quarter revenues climbed 22% year over year to $637.4 million on the back of Support, Maintenance and Services (up 19.9% to $426 million), robust System sales (up 24.2% to $195.3 million) and higher revenues from Reimbursed Travel (up 36.3% to about $16.0 million).

We believe long-term investors may consider Cerner, which serves a sizeable installed hospital base. It requires composite clinically-focused applications complying with ‘meaningful use’ requirements, reimbursement problems and complex coding challenges. The company has long-standing, integrated and seamless solutions for both inpatient and ambulatory settings.

On the negative side, the federal Stimulus program will gradually wind down. Cerner faces stiff competition from established HCIT players, such as Athenahealth (ATHN - Analyst Report), Allscripts Healthcare (MDRX - Analyst Report) and Quality Systems (QSII - Analyst Report) and many others in a crowded field. The company is developing multiple growth drivers which will ensure its future growth.

We have a long-term ‘Neutral’ recommendation on Cerner. The stock currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

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