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HSA-related firms attract investors

Observers say companies benefiting from consumer-directed health care have a large growth potential, but investments are not without risks.

By Katherine Vogt, amednews staff. March 13, 2006.

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Investors are taking notice of companies they believe are poised to reap the benefits of a shift toward consumer-directed health care.

The most prominent recent example is publicly traded health ratings company HealthGrades Inc. An affiliate of mutual fund giant Fidelity Investments recently purchased 2.7 million shares, or 10% of HealthGrade's stock, and RS Investment Management Co. -- a San Francisco-based mutual fund concentrating on small- and mid-cap stocks -- snapped up 2.1 million shares, or a 7.6% stake, according to filings with the Securities and Exchange Commission. To leaders of the 7-year-old company, it was a warm embrace from the investment community.

"It's a real pat on the back for HealthGrades and kudos to the company for attracting their investment," said Sarah Loughran, executive vice president of the Golden, Colo.-based firm, which provides ratings information about physicians, hospitals and nursing homes.

Observers say companies such as HealthGrades might grow significantly if consumer-directed health care takes off to the extent that some are predicting because consumers will be hungry for information as they take on more responsibility in directing their own health care.

Internet health company WebMD, for example, is hoping for greater Wall Street interest with its announcement that it has signed contracts with large health plans to operate private-access sites where members can look up medical records and compare costs and ratings for doctors and hospitals.