Much has been made about President Obama’s health care reform plans and what effects the administration’s cost-cuting concepts will have on physicians. According to the Wall Street Journal, the Democrats are waging a “quiet war” on specialists in favor of primary care doctors who cost less to train and use less expensive procedures and technology (http://online.wsj.com/article/SB10001424052748704471504574443472658898710.html).

Whether that’s accurate remains to be seen, but there are several medical device companies, including small caps, that are focused on providing services to primary care doctors as a key part of their growth strategy. If they can provide services for these physicians that will help them boost their revenues that will drive sales, is how the thinking goes.

It’s a tried and true method, as followers of small medical products and diagnostic services companies like Hayward, CA-based Cholestech (www.cholestech.com) surely remember. Cholestech was successful enough to be acquired by Waltham, MA-based Inverness Medical Innovations (NYSE: IMA, http://www.invernessmedical.com), a large (more than $3 billion market cap) developer and manufacturer of medical device products.

Among the small caps, companies like Poway, CA-based Digirad* (Nasdaq: DRAD, http://digirad.com) bring cardiac imaging services directly to the primary physician’s office, allowing the doctor to earn the imaging revenues rather than farming them out to a cardiologist or other specialist. Bothell, WA-based Cardiac Science* (Nasdaq: CSCX, http://www.cardiacscience.com ) manufacturers and sells cardiac monitoring devices, including the well-known stress testing equipment, directly to primary care physicians.

*Indicates Allen & Caron client

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