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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (30317)	3/12/2008 12:59:46 PM
From: E_K_S	Read Replies (1) \| Respond to of 78705

Hi Spekulatius - Do you have any idea if the industry SG&A will drop substantially once the industry completes their conversion to digital patient record accounting? I am not sure what percentage of the overall SG&A is made up in patient record administration (including digital prescription accounting & tracking) and billing but I suspect it is large. The current paper system is inefficient and costly. Many of the Doctors I speak with are in the middle of a multi year transition from paper to digital patient record systems. As the first phase of these systems get installed and integrated with patient prescription and billing functions, my guess is that overall costs will fall (or at least stop rising) and operating margins will increase. The big benefit is that management should have more accurate and timely information to manage their costs and account collections (especially Medicare reimbursements). It's still early for many of these companies to see these direct costs savings but once this transition is completed, continued savings will be sustained for many years. Eventually the market will reward the quality and sustainability of their earnings and prices should move higher. EKS

To: Spekulatius who wrote (30317)	3/12/2008 2:13:27 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78705

I looked at regular ROE, so you are right that assets get inflated by goodwill. But the problem is that if I look at tangible ROE for WLP, then I should look at tangible ROE for JNJ and KO and others too. And WLP will still be an underdog in that comparison - JNJ had a tangible ROE of >100% at some point. In addition WLP does not have high ROE since 2001, so it's not as if the recent acquisitions and goodwill depressed it. You are right in your business analysis. I would guess Buffett saw the same economics that you see there, so you are in good company. I will keep it in mind, but probably I won't buy the stocks. :) Thanks