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Eight analysts and top management from ninety-five sector firms examine the Healthcare sector in this special 352-page Bear, Stearns & Company 14th Annual Healthcare Conference issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info418.htm.

TWST: What are the boundaries of your coverage area?

Mr. Falci: I am part of a four-person team that has built a universe that we call “medical information management.” That universe embodies three distinct areas: healthcare information technology, companies that sell software and IT services to the healthcare industry; healthcare distribution, companies that primarily distribute pharmaceutical products as well as other types of products to the healthcare industry; and pharmaceutical services, companies that outsource different types of activities for the pharmaceutical industry (followed by my colleague Steve Unger). We cover a total of 19 stocks, roughly evenly distributed among those three areas.

TWST: When you look at the overriding issues and trends today, are they generally common to those three areas, or are there any issues that become more specific?

Mr. Falci: The reason we cover all three is that we believe there are some common themes that bridge those worlds. Probably the single biggest one is the dramatic level of inefficiencies in the healthcare system, most of which is attributed to the lack of investment in IT across all areas of health care. The common theme that goes across virtually every stock we follow is the belief that all of these companies are trying to find ways to use information technology to automate or dramatically improve a certain element of the healthcare process, whether it’s paying bills more efficiently, delivering health care more efficiently to the patient, or distributing product more efficiently so that there’s less waste in the system for collecting clinical trial data from subjects and so that the data gets collected more quickly and effectively. That’s a theme that has a lot of longevity — it isn’t really a cyclical theme. We think there’s a multi-multi-year cycle ahead of us where areas of health care are seeing the need and the opportunity to invest in IT and other types of services in order to improve their bottom line. All of our companies are going to benefit from that theme. Briefly, on a specific level, right now the healthcare IT names are benefiting from a lot of press and attention being drawn to medical errors and substandard clinical care. There have been tons of studies done recently to suggest that patients are receiving less than optimal care because the physicians don’t have all the data available to them at the time they treat patients. They might prescribe a drug that isn’t really appropriate for a particular patient without realizing that the patient is allergic to the drug, or they might prescribe a therapy that is less effective than another option just because they don’t have all the information available to them. So hospital systems and others are beginning to invest heavily in that area in order to really address what’s becoming a popular movement toward improving clinical information access to the physicians.

TWST: Do you have anybody else at the buy level?

Mr. Falci: Yes. We recently raised our rating on AmeriSource Corporation ahead of their expected merger with Bergen Brunswig. Cerner (Nasdaq:CERN) is the absolute leader in providing clinical systems to hospitals. They’ve got the most advanced technology and architecture available to hospitals to help make all types of patient medical data accessible and analyzable to anybody in that hospital who might benefit from it. So their system really provides measurable benefit for the clients, and, again, they’re selling them right now at a time when they’ve gotten their product up to a point where it’s very proven and mature. It’s been out on the market for three years now, and has really proven itself. Now their clients are saying, “This is exactly where I need to spend my money.” So they’re in the right place at the right time with the best product.

This special conference issue includes:

1) Investing in Health Care - In an in-depth (2,200 words) Analyst Interview, Joseph Riccardo, Managing Director at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

2) Medical Information Management - In an in-depth (4,700 words) Analyst Interview, Raymond Falci, Senior Managing Director at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

3) US Pharmaceutical Companies - In an in-depth (2,200 words) Analyst Interview, Scott Shevick, Senior Managing Director covering the major pharmaceuticals sector of the healthcare industry at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

4) Biotechnology Stocks - In an in-depth (1,100 words) Analyst Interview, Akhtar Samad, Managing Director at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

5) Pharmaceutical Stocks - In an in-depth (2,100 words) Analyst Interview, Frederick Wise, Managing Director at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

6) Large Cap Biotechnology Stocks - In an in-depth (1,300 words) Analyst Interview, Ronald Renaud, Associate Director at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

7) Managed Care/Health Benefits - In an in-depth (1,600 words) Analyst Interview, John Rex, Senior Research Analyst at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

8) Pharmaceutical Services - In an in-depth (2,400 words) Analyst Interview, Stephen Unger, Equity Research Analyst at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

9) CEO interviews (average 2,500 words). Top management of ninety-five sector firms examine the outlook for their firm and the sector.