Page 1 of 3

Henry Schein CEO Stanley Bergman calls his company’s push to get doctors in private practice to adopt electronic medical recordkeeping, or EMR, “enlightened self-interest” — a happy combination of public good and private profit.

Certainly, the EMR drive by the U.S.’s largest distributor of dental, medical and animal health products and services constitutes shrewd timing: Not only does the Obama health care plan make EMR an explicit goal, but the American Recovery and Reinvestment Act of 2009 earmarks tens of billions of dollars for doctors and hospitals to buy software to automate patient records. This March, Henry Schein launched ConnectHealth to help its physician clients digitize their medical records.

So promising are Henry Schein’s prospects in EMR that it’s easy to overlook the company’s countless other activities. The nearly 80-year-old Melville, New York–based Henry Schein supplies 190,000 products, from needles and dental implants to tongue depressors and lasers, to 600,000 customers in 200 countries. Last year it reported record net sales of $6.5 billion, and the brisk pace continued in the first quarter of 2010: a whopping $1.8 billion in revenue, a gain of 18.5 percent over first-quarter 2009.

In a conversation with Institutional Investor Contributing Writer Katie Gilbert, the South African–born Bergman, 60, pokes and prods the Obama health care plan and gives his diagnosis for how to make its EMR provisions more robust.

Institutional Investor: What is Henry Schein doing to make wide use of EMR a reality?

Bergman: We have a strategic alliance with a company called Allscripts that has the largest installed base of practice management and electronic medical records for office-based physicians. Our goal is to work with Allscripts to go to as many American physicians and private practices as possible, helping them install electronic medical records software. About three years ago we did an in-depth analysis of the software market and concluded that Allscripts was the best partner for us, so we approached them. About a year ago we became the exclusive distributor for their main product. Allscripts has the best product out there, has the largest footprint and is well positioned to help automate the physician office.

Why is EMR so important?

On the one hand, the American public and the health care practitioner will be much better off with electronic medical records. It will mean fewer errors, more efficient practices and the ability to deliver higher quality health care. So it makes a lot of sense from a public policy point of view. On the other side, we can make money from this. Every system we sell has related to it electronic claims processing, credit card financing, patient financing opportunities. That’s why we see EMR as enlightened self-interest: It’s good for the American public, and it’s also good for Henry Schein, profitwise.

What does the Obama health care plan mean for you?

The Obama plan is about providing more access to care in the office setting — before the hospital. It provides a lot of funding for primary preventative care that really takes place in the physician’s office. And the doctor is our customer. So in broad strokes, we see more procedures ultimately taking place in an office setting and the “imbursement” not being increased significantly. What that means is that the imbursement per procedure will have to go down. So workers will have to run a more efficient office, most likely by utilizing technology, including practice management software and devices connected to that software. And those are all products that we do very well with. More patients are going to be given access to preventative care, which means fewer patients in the hospital and more-efficient, quality care. But we will need to help the practitioner run a more efficient practice. And we have a very good solution for the practitioner.

1 | 2 | 3