The Obama presidency is probably the most anticipated since Reagan. He has instilled a sense of hope in the world even as it sinks into the most severe economic recession since, well, the beginning of the Reagan era.
The man has a lot to do, although he is running out of levers even before he enters office. However, lets assume that he is able to do what he says he can do and he finds $100 billion or so to initiate his healthcare program. Is there a spillover effect that benefits Canadian IT vendors in the healthcare sector? Possibly. As I outline below, it depends on political will. Notwithstanding, I would argue that those Companies that are already in the US market and employing Americans may benefit most.
Throughout his campaign, Obama stated that one of the cornerstones to his healthcare plan was an investment in information technology. His objective is to find ways to consolidate medical records and to improve access by both health care workers and patients to consolidated medical information on every American securely.
Clearly the capacity and the capabilities already exist to do this. Most major internet portals and especially social networks have gathered significant amounts of data about hundreds of millions of people in a fairly short period of time. SaaS providers have been building sophisticated permission and privacy algorithms for years, so secure access to private information should be a no brainer. In fact, since the early stages of the commercial internet, the technical capability has been there to establish centralized healthcare databases that could help improve doctors' access to and understanding of a patient's health situation. There has been limited political will.
The medical and pharmaceutical lobbies are among the most powerful in the United States. For decades, doctors have been resistant to information technology to the point of intransigence. Underlying this resistance has been suspicion and a "doctor knows best" attitude that has resulted in failure for many initiatives. Let's assume that Obama can instill the political will - so far he seems capable.
There are a few Canadian IT vendors that already derive a good portion of business from the needs of US hospital administrators and pharmacies including CGI Group (GIB.A.TO), Systems Excellence (SXC.TO) and Logibec (LGI.TO) among others. All three generate cash, have relatively strong balance sheets, are net income profitable and have footholds into the US healthcare sector. Systems Excellence and Logibec are healthcare pureplays and are more sensitive to conditions in the healthcare sector. Both are acquisitive, and I expect that they will continue to make strategic acquisitions as the US healthcare system undergoes its upgrade.
As Obama begins to formulate his plans, keep an eye on SXC, LGI and GIB.A because they could each be positioned to gain incremental upside. The underlying risk is that the AMA and the pharma lobbies impede Obama's progress once he enters office, which would, in turn, reduce the potential for incremental upside for these Companies.