Imaging and interoperability solutions provider, Merge Healthcare ( MRGE - Analyst Report ) recently revealed that the Merge Hemo had been selected as Category Leader in the Best in KLAS Awards for 2012 in the realm of Software and Services for Cardiology Hemodynamics. This was the second year that Merge’s offering has won this award.

Merge Hemo has already been operationalized at more than 500 cardiac cath labs. The device collects data and document matters in a timely manner to facilitate a smooth flow of work.

Merge Hemo gives medical practitioners the power to collect data using a user friendly interface. The information collected by Merge Hemo may be comfortably adopted with EHR. Consequently, cath lab data is properly integrated into the composite electronic patient chart.

The macro stimulus (HITECH) aims to increase the use of EHR by medical practitioners, in both ambulatory and hospital-based settings. As a result, select companies in this space are witnessing heightened investor interest.

Favorable demographic trends, reinforced by a supportive regulatory environment, are expected to sustain strong growth in demand for EHR-related software in the foreseeable future. According to recent information from Frost & Sullivan and Merge’s own research, the global market for imaging software and services, healthcare IT interoperability solutions and EHR solutions for radiology, cardiology, ophthalmology and orthopedics is worth $7.5 billion annually.

Thus, with greater adoption of EHRs in doctor’s offices, hospitals and imaging centers, the need for data exchange is on the rise. Against this backdrop, a reliable imaging interoperability platform becomes significant as a vendor-neutral archive ("VNA").

We expect that the persistent product development and continued client wins will benefit Merge in the long run. It is believed that Merge is well placed to bag a meaningful share of the multi-billion dollar ARRA-related healthcare information technology investment opportunity.

However, we remain concerned about the declining Medicare reimbursement for advanced medical imaging that could negatively affect hospital and imaging clinic revenues, thereby reducing the demand for the imaging-related software and services offered by Merge.

Furthermore, the presence of many large players like General Electric ( GE - Analyst Report ) and McKesson Corporation ( MCK - Analyst Report ) has made the healthcare solutions and services market highly competitive.

Currently, Merge retains a short-term Zacks #3 Rank (Hold). Over the long term, we have a Neutral recommendation on the stock.