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Healthcare tech stocks have had a good run this year, with many outperforming the broader market. The pandemic has led to increased adoption of virtual care services and other technology-driven healthcare solutions. Teladoc, for example, saw its growth slow as life returned to normal, but its post-pandemic prospects are still very good thanks to demand from individuals, employers, and governments looking to control healthcare costs. The best-performing healthcare tech stocks have been those that have kept up with technological advances.
Analysts remain optimistic about the sector's prospects over the next few years. A study projects that healthcare company earnings will grow 6% annually from 2021 through 2025, which would be a 20% increase producing an additional $31 billion in profits. It is also worth noting that healthcare stocks are typically considered to be defensive stocks because they provide steady returns regardless of the overall direction of the stock market. All these factors make healthcare stocks an attractive investment option now. SCWorx is an example of a strong candidate for inclusion in a portfolio for 2023. SCWORX is a NASDAQ company- symbol WORX, which provides SaaS solutions to hospitals that directly impact operational efficiencies for accurate billing, cost savings, and revenue capture. It’s proprietary software solutions allow hospitals to use existing systems to build a single source of truth for their data. Over 1,300 hospitals are currently using SCWorx including world-class centers such as Mayo, NY Presbyterian. Over 12,000,000 items in the hospital supply chain are tracked by SCWorx. We have a thorough overview of Healthcare SaaS tech here. Hospitals are facing financial challenges for a variety of reasons, including rising operating costs, decreasing reimbursements from payers, and increasing numbers of uninsured patients. Additionally, hospitals struggle with inefficient processes and outdated technology, which contribute to financial losses. For example, manual record-keeping, duplication of services, poor supply chain management, and communication breakdowns can all contribute to inefficiencies that drive up costs and hinder hospitals' ability to provide high-quality care. Hospitals often operate on thin profit margins, making it difficult for them to absorb any financial losses. These factors contribute to the financial struggles faced by hospitals today. The external factors of running a hospital such as increased costs of supplies, medication, and staffing make it essential for hospitals to run their businesses in a more “information first” manner using data and analytics to identify and address internal operational defects as well as forecasting to mitigate continued and compounding financial maladministration. For over 10 years, SCWorx has been immersed in transforming the business of hospitals by addressing the greatest single contributing factor for healthcare administration success- truth in data. SCWorx solutions provide accuracy in a hospital’s data across all systems in real time with on demand analytics. Providing a single source of truth allows hospitals access and reliability in advanced tools to redesign, restructure and expand operations and processes leading to significant savings. 7 ways SCWorx is transforming the business of hospitals 1- Healthcare profitability achieved through data accuracy by SCWorx providing evidence-based and data-driven best practices The truth is, most hospitals don't have accurate data which causes them to spend excessively. SCWorx improves data accuracy considerably and provides integration and interoperability which is proven to help hospitals realize greater savings and recapture revenue lost in inaccurate and misleading data inputs. On an individual basis by using accurate data, hospitals can reduce total supply chain costs by 17.8 percent, or up to $9.9 million per year by decreasing variation in pricing, product use, and clinical outcomes garnered from data analytics. This is a massive saving that can be invested in improving care delivery. With the data and the analytics solution, SCWorx empowers healthcare providers to maintain comprehensive access and visibility to advanced business intelligence that enables better decision-making and reductions in product costs and utilization, Bad and disconnected data is a core problem exacerbated by the constantly introducing new supply chain. SCWorx resolves this by helping hospitals have accurate data, and the ability to easily and in real-time analyze and take action. Missed charges alone can account for a shortfall of over 10%. 2- SCWorx enables increased efficiency in supply chain operations When a hospital buys a product, typically entering the new item into a hospital’s system is cumbersome and fraught with errors. SCWorx has over 12,000,000 items in its Master List of hospital products each with over 250 attributes collected(description, SKU, GTIN, weight, sterile, dimensions, etc.). SCWorx allows the hospital to simply enter the product SKU and their systems populate with all of the information from the SCWorx database. The information is constantly being tested for accuracy and updated on the product attribute level. This automated process eliminates hospital administration redundancy, provides greater product visibility, and facilitates the easy sharing of information for systems such as finance, surgery, and supply chain. SCWorx provides this on demand solution which is far quicker than the current error prone manual entry while ensuring accurate data. 3- Eliminates the reliance on consultants and the hourly fee professional services model with SCWorx SaaS model The SaaS model of SCWorx provides hospital administrations with a straightforward annual subscription cost structure based on guaranteed results rather than the current industry norm of open ended management consulting engagements where a typical one month strategy case costs between $500,000 and $1,250,000. By using the SaaS solution, hospitals create an internal team with ownership from within. The internal hospital team is built with shared values of achieving the highest quality and what is best fiscally for the hospital. In contrast, having a consultant come in one day with recommendations on how the rest of the country does things doesn’t necessarily set the hospital up for success. Consultant fatigue is real and frankly, SCWorx SaaS solutions are more robust, less expensive, and allow for the hospitals to maintain their focus by empowering their teams with accurate data and analytics. This is a game changer in an industry where traditional professional services providers and consultants promise to deliver savings and efficiency without the ability to address the core problem of data integrity. The old adage “garbage in, garbage out” is currently the rule in hospital data as acquisitions, mergers, incompatible and old systems, and lack of standardization in suppliers play a significant role to overcome this challenge of accurate data. SCWORX has dynamic connections that automatically structure, repair, synchronize, and maintain hospital data. 4- Rebate reimbursements capture missed savings with SCWorx A rarely talked about game in hospital purchasing is that prices rarely get discounted but the use of product rebates is the norm. The fact is, manufacturers, do not want the market to know their bottom line price. Approximately 60% of all rebates don’t get redeemed. This is for a few reasons- the redemption process is too cumbersome, unaware there is a rebate, or due to disorganization. SCWorx single source of truth, helps hospitals successfully navigate this process. In addition, many manufacturers discontinue products and replace them with the same product under a different SKU. The hospitals typically don’t reconcile the association of the products due to poor data accuracy which leads to missed rebates. SCWorx provides accurate data on a granular level. With a report run through SCWorx, connects the new product with the rebate and makes it easy to know if there is a rebate. 5- Deliver on the promises of the HITECH Act by making EPIC smart and interoperable No trend has been more consequential to the healthcare industry than its adoption of information technology in the delivery system. In 2009, the HITECH Act (Health Information Technology for Economic and Clinical Health) as part of the American Recovery and Reinvestment Act set in motion the adoption and use of information technology to structure, collect and exchange data about patient care from every touchpoint. In short, it forced electronic medical records(EMR) to become accessible to and used by providers and patients to “improve health and reduce costs”. The leader in patient care delivery records access is a system EPIC. EPIC is used by hospitals and health systems to access, organize, store and share EMR. Epic holds information on a per patient basis. The problem is, they need to tie the patient to the utilization whether it's a procedure or an office visit or whatever. There can be a hundred different locations within a hospital for utilization. Hospitals need to be able to tie all to one source. You can't tie it back in one system to a person's name, another system to the product, and another to the insurance. EPIC creates a patient ID where everything ties back. The problem with that is it only ties back to a central point of utilization. It doesn’t tie back to supply and it doesn't tie back to the general ledger. It doesn't tie to reimbursements or rebates or anything else. When the Act came in to digitize health records, that was the main goal and till now it has failed horribly. SCWorx solves this problem. There is a significant amount of slippage and inefficiencies from supply chain, over purchasing and lost charges. Each disparate hospital system has its own code. Supply has its code. The patient has their code and finance theirs, as does the operating room and the cath lab because they’re separate as well. There is an overwhelming amount of actionable data that is being lost due to not being able to look at it in totality or with confidence that it is accurate. SCWorx improves the flow of information quickly and accurately between the existing systems allowing for supply chain cost reductions, decreased A/R aging, cost visibility, and accelerated and more accurate billing. Individual clients of SCWorx have reported saving over $3 million dollars in annual cost savings and revenue capture. 6- SCWorx gives hospitals the ability to use granular data for true cost analysis When someone goes to have knee replacement surgery with a doctor, the hospital can't really tell you what it's going to cost because the hospital doesn't know. They don’t know how many products they're going to use, they don’t know what is going to happen once they are cut open nor do they know how long the operation will take. This is understandable. The hospital doesn’t perform just one knee replacement, They do hundreds of these procedures annually. Utilizing SCWorx SaaS solution, the hospital on a procedure level can benchmark all of their procedures to hundreds of procedures at other hospitals which allows them to reign in costs, identify inefficiencies and be able to better forecast. On a doctor level, SCWorx can take the data from the hospital’s financial system, and the clinical system about the patient and tie that into what products they’re using. With this new ability, the hospital can also do a comparison between doctors. For example, A hospital with seven doctors that do hip and knee surgeries can do an analysis- Doctor A’s knee replacement surgery is costing on average $15,000. Doctor B is $20,000. You can start looking at time- Doctor A took eight hours for the procedure. Doctor B took four hours. And you can start to tie together the financial piece. What products did that doctor use? What is the brand of that product? How many did they use? Things like that. You can now compare procedures on a doctor level for a total basis of what that cost was. This type of understanding by the hospitals could not be achieved prior to SCWorx. Tying it all together into mini buckets is very difficult both by procedure and even harder by the doctor. Because of the granular collection and cleaning of data from multiple systems, SCWorx uses everything from the bottom of the pyramid to build an accurate analysis. It uses their supply chain data, their clinical patient data, their financial data about rebates and more. 7- Benchmarking supply chain costs is achievable with SCWorx Supply chain costs begin at the contract level. Having the ability to perform spend comparisons is essential to reducing costs and having a better understanding of your business yet is very hard to perform without corresponding data. SCWorx Solution is uniquely positioned to provide benchmarking to compare a hospital’s spend to similar hospitals. As an example, a small hospital in New Hampshire might pay a different price for supplies than a major center in New York because the spend is that much larger. This ends up causing consolidation in the industry. There may be 15 rural hospitals in the New England area that on a consolidated basis buy through a larger Hospital for better pricing. The large hospital in an effort to take advantage of its new buying power may want to compare its spend to an even larger hospital in the Northeast. SCWorx solution allows the New England hospital the ability to compare the two entities and finds it’s costs to the comparable hospital are 20% higher on certain products. Once identified, the hospital can renegotiate its contract pricing. Contract renegotiation based on benchmarking can save a hospital upward of 20%. SCWorx positioned for growth SCWorx has been building SaaS solutions for healthcare for over a decade with a strong focus on data integrity. Its CEO is a well-known healthtech innovator with a track record of developing and commercializing successful solutions having founded a SaaS firm culminating with an exit to a public company. SCWorx and its team have a deep understanding of the various parts of the healthcare ecosystem. It’s solution is not just the result of 10 years of building one of the largest databases in the industry(which is a barrier to entry) but also comes from the team's experience and expertise gained from working in the healthcare industry, which allows them to identify problems and create solutions to fix them. As an investment, SCWorx is currently trading at around 1X sales. A customary metric used for healthcare SaaS B2B companies is between 6X ARR-14XARR which would make SCWorx significantly undervalued. The company is positioned for growth by having: • Large LTV • High client retention • Scaleable model • Proprietary SaaS software • Ability to impact multiple segments of the hospital administration business • Business model has been updated to allow for shorter sales cycles, broader adoption with add on services • Software base provides swift innovation timelines and tailored solutions for customers • No debt • As SCWorx increases the use cases of their SaaS solution, they have the opportunity to upsell incremental technology and services • Restructured Board of Directors with C-level experienced independent members • Industry has few players and none can solve the problems SCWorx does as effectively or at the price point. To pick microcap stocks start by identifying the companies that serve markets in need of disruption where their customers can’t live without their products in any economic environment. From an investment perspective, the above analysis meets such criteria for SCWorx. Microcap investing can involve significant risk due to low trading volume and lack of coverage by the analyst community however, there is the potential for outsized gains. Source: https://www.lionseeker.com/insights/2023-healthcare-stock-spotlight-7-ways-sworx-is-transforming-the-business-of-hospitals
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