The R&D Tax Credit Aspects of the Medical Software Industry



By , , and


Propelled by Federal regulations, the medical data software industry has achieved success and scale, enabling the next generation of software development. By the same government mandates, U.S. patient medical records are well on their way to being fully automated.


The Research & Development Tax Credit

Enacted in 1981, the Federal Research and Development (R&D) Tax Credit allows a credit of up to 13% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

  • New or improved products, processes, or software
  • Technological in nature
  • Elimination of uncertainty
  • Process of experimentation

        Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On December 18, 2015, President Obama signed the bill making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax and startup businesses can utilize the credit against up to $250,000 per year in payroll taxes.



Federal Mandates


The 2009 HITECH Act

The 2009 Federal regulations include the $27 billion Health Information Technology for Economic and Clinical Act (HITECH Act). As a result, the percentage of heath care systems that track providers with electronic records went from approximately 20% to a current level of 60%.


Obama Care Medical Software Mandates

The Affordable Care Act (ObamaCare), enacted in 2010, mandated that most, if not all, health care records be moved on line by 2014. Obama Care more broadly requires a value based Medicare and Medicaid payment system that tracks what health care providers charge for services.



New Levels of R& D Investment

Investor's Business Daily (IBD) contains a list publicly traded companies in the Computer Software-Medical group, many of which are substantially increasing their R&D budgets. For example:

  • Accelrys announced a 19% increase in product development spending for the first quarter of 2013.
  • Athena Health Care announced a 67% increase in the first quarter of 2013 for product development spending.
  • MedAssets reported a 22.8% first quarter increase for product development expenses in 2013.


These new generation software investments are presented below and are potentially eligible for Federal R&D tax credits.


Selected Public Medical Software Companies

                3 Year Book R&D Expenses


medical-software-companies-randd-expenses



Electronic Records Reach 60%

By crossing the 60% online conversion rate, it is clear that the U.S. will shortly achieve a nearly 100% electronic record system. This switch to electronic medical records (EMRs) can provide the gateway needed between the Big Data of the human genome/DNA and disease data.

Current EMR systems do not have the capacity to store large amounts of data. That is where the National Human Genome Research Institute comes in, which funds the development of Electronic Medical Records and Genomics, or the eMERGE network. eMERGE is designed to store both genomic and EMR data, creating a platform to identify correlations between DNA make-up and disease.

Furthermore, the large increase in EMR data has triggered a wide range of innovation in the medical software sector. In 2012, 1,600 business owners and innovators packed into rooms at the Washington Convention Center to hear presentations from approximately 100 mostly new companies selected from a file of 230 companies that had applied to present . Some of the new companies include:

Eviti: Develops software technology to help cancer patients get the right combination of drugs and or radiation from the onset.

Teladoc: Develops software to take underutilized physician time and connects the physician to care opportunities including remote patient visits and emergency rooms

Humedica: develops software to help health care providers analyze patient records, recording services provided and reports on outcomes

Lumeris: Uses health care analytics applied to real time data to examine patient care aimed at improving medical decision making, collaboration and cost savings



Conclusion

The conversion to mostly electronic medical records has opened the door for innovative software developments. This EMR conversion also bridges the gap between the Big Data of human genomes/DNA and disease treatment. Federal R&D tax credits are available for companies with qualifying activities facilitating this effort.

Article Citation List

   


Authors

Charles R Goulding Attorney/CPA, is the President of R&D Tax Savers.

Andrea Albanese is a Project Manager with R&D Tax Savers.

Charles G Goulding is the Manager of R&D Tax Savers.


Similar Articles
The R&D Tax Credit Aspects of Blockchain for Supply Chains
The R&D Tax Credit Aspects of Physical Security Technology
The R&D Tax Credit Aspects of Mechatronics
The R&D Tax Credit Aspects of Driverless Cars
The R&D Tax Credit Aspects of SaaS Start-Ups
The R&D Tax Credit Aspects of Emotion-Recognition Technology
The R&D Tax Credit Aspects of AI in the Insurance Industry
The R&D Tax Credit Aspects of Emerging AV Trends
Enhanced R&D Tax Credits for Specialized Co-Shared Spaces
Ethereum's Impact on Digital Contracting Creates R&D Tax Credit Opportunities
The R&D Tax Credit Aspects of Geofencing
The R&D Tax Credit Aspects of Immunology
The R&D Tax Credit Aspects of Distribution Center Automation
The R&D Tax Credit Aspects of Law Firm Artificial Intelligence
The R&D Tax Credit Aspects of Avionics
The R&D Tax Credit Aspects of Arthritis
The R&D Tax Credit Aspects of Asthma
The R&D Tax Credit Aspects of Telemedicine
R&D Tax Credits Enhance Life Science Impact Investing
State & Local Tax Jurisdictions Address Media Streaming and Cloud Services
Federal Government Provides Faster Approvals and Tax Credits for Consumer FinTech Products
The R&D Tax Credit Aspects of Pediatric Hypertension
The R&D Tax Credit Aspects of Voice-Activated Software
The R&D Tax Credit Aspects of Parkinsons Disease Technology
The R&D Tax Credit Aspects of Artificially Intelligent Hedge Funds
The R&D Tax Credit Aspects of Legal Medical Marijuana
Reaching for the Moon: The R&D Tax Credit Aspects of Conquering Cancer
The R&D Tax Credit Aspects of LiDAR
The R&D Tax Credit Aspects of Educational Technology (EdTech)
The R&D Tax Credit Aspects of Zika
The R&D Tax Aspects of CRISPR-CAS9
The R&D Tax Credit Aspects of Bioelectronic Medicine
The R&D Tax Credit Aspects of Liquid Biopsy Testing
The R&D Tax Credit Aspects of Cryogenics
The R&D Tax Credit Aspects of Cyber Security Start-Ups
The R&D Tax Credit Aspects of Construction Industry IoT
R&D Tax Credits Provide New Opportunities for Artificial Intelligence Start-Ups
The R&D Tax Credit Aspects of NYC Start-Ups
The R&D Tax Credit Aspects of Virtual Reality Technology
The R&D Tax Aspects of Microbiome Research
The R&D Tax Credit Aspects of Water Analytics
The R&D Tax Aspects of Artificial Intelligence Robo-Advisors
The R&D Tax Aspects of Mouse Models in Clinical Research
The R&D Tax Credit Aspects of Natural Language Processing (NLP) Innovation
The R&D Tax Aspects of Precision Medicine
The R&D Tax Aspects of Synthetic Biology
The R&D Tax Aspects of Pharmaceutical Packaging
New Standards and Regulations Create R&D Tax Credit Opportunities for the Pharmaceutical Packaging Industry
The R&D Tax Credit Aspects of Orphan Drugs
The R&D Tax Credit Aspects of Blood
The R&D Tax Aspects of Regenerative Medicine
The R&D Tax Credit Aspects of Video Compression Technology
The R&D Tax Credit Aspects of Environmental Remediation
The R&D Tax Credit Aspects of Automated Coding
The R&D Tax Credit Aspects of Gastro Technology
The R&D Tax Credit Aspects of Payment Technology
The R&D Tax Credit Aspects of Restaurant Technology
R&D Tax Credits and the Second Wave of Cloud Adoption
The R&D Tax Aspects of Data Storage Startups
The R&D Tax Credit Aspects of Cyber Security
The R&D Tax Credit Aspects of Mobile Applications
R&D Tax Credits for the Modern Insurance Industry
The R&D Tax Credit Aspects of Multiple Sclerosis
The+R%26D+Tax+Credit+Aspects+of+the+Internet+of+DNA
The R&D Tax Credit Aspects of Modern Dental Labs
The R&D Tax Credit Aspects of Concussion Technology
The R&D Tax Credit Aspects of Schizophrenia
The R&D Tax Credit Aspects of IoT Communication
The R&D Tax Credit Aspects of Bitcoin and Blockchain Technology
The R&D Tax Aspects of Cancer Treatment
The R&D Tax Aspects of Near Field Communication
The R&D Tax Aspects of the New FDA Mobile Apps Requirements
Tapping the Power of Big Data and R&D Tax Credits for Utility Companies
The R&D Tax Aspects of Computer Enabled Human Identification
The R&D Tax Credit Aspects of Heart Disease
The R&D Tax Credit Aspects of Biological Drugs
The R&D Tax Credit Aspects of Novel Uses for Genetically Engineered Organisms
The R&D Tax Credit Aspects of New York City's Engineering Education and Googlization
The R&D Tax Aspects of Respiratory Diseases
The R&D Tax Credit Aspects of Software Modeling Analytics
The R&D Tax Credit Aspects of Cognitive Computing
The R&D Tax Credit Aspects of Logistics Software and Process Innovation
The R&D Tax Aspects of Cameras of the 21st Century
The R&D Tax Credit Aspects of Network Security
R&D Tax Aspects of DNA Identification
R&D Tax Credit Aspects of Cyber Security and Homeland Protection
Financial Product Trading Platform Artificial Intelligence R&D Tax Credits
The R&D Tax Credit Aspects of Cosmetics
Gig City Startups and R&D Tax Credits
The R&D Tax Credit Aspects of Major Life Science Benefactors
The R&D Tax Credit Aspects of the Health Cloud
The Internet of Things Creates R&D Tax Credit Opportunity
The R&D Tax Credit Aspects of Mobile Banking Applications
The R&D Tax Credit Aspects of Autism
The R&D Tax Credit Aspects of 3D Bioprinting
The R&D Tax Credit Aspects of In-Image Advertising
R&D Tax Credits for Hybrid Call Centers - Airline, Hotel, and Car Rental Industries
The R&D Tax Aspects of Advertising Science
The R&D Tax Aspects of Data Science
R&D Tax Aspects of Radio Frequency Identification
The R&D Credit Aspects of Cell Therapy
The R&D Tax Aspects of Advanced Driver Assist Systems
The R&D Tax Credit Aspects of Sugar Substitution and Reduction in Food Products
The R&D Tax Credit Aspects of Gluten-Free Foods
The R&D Tax Aspects of the Internet of Residential Things
The R&D Tax Aspects of Web Television
R&D Tax Credit Aspects of Sleep Innovation
R&D Tax Credit Aspects of Medical Robotics
R&D Tax Credit Aspects of Industrial Robotics
R&D Tax Credit Aspects of Service Robotics
Yes Alice, Patents and R&D Tax Credits Remain Available for the Internet of Things!
The R&D Tax Aspects of Neuroscience
How Salesmen Can Use R&D Tax Credits to Sell Today's Software Products Engagements
The R&D Tax Aspects of Cloud Computing
The R&D Tax Credit Aspects of Hearing Technology
The R&D Tax Credit Aspects of Hybrid Call Centers for Health Insurers
The R&D Tax Credit Aspects of Eye Disease
The R&D Tax Credit Aspects of Dermatology Innovation
Now Every Business is a Software Business
The R&D Tax Credit Aspects of Bioinformatics
The R&D Tax Aspects of Lab Equipment and Instrumentation
The R&D Tax Aspects of Salt Reduction
The R&D Tax Aspects of Robot Software
The R&D Tax Aspects of Machine-to-Machine (M2M) Innovation
The R&D Tax Aspects of Financial Technology Services
Beacons Create R&D Tax Credit Opportunity
Fast Growth of Sharing Economy Impacts Tax Reporting
The R&D Tax Credit Aspects of Retail Technology
The R&D Tax Aspects of Generic Drugs
The R&D Tax Credit Aspects of Improving Virtual Reality Technology
The R&D Tax Credit Opportunities for Mobile Devices
The R&D Tax Credit Aspects of Wearable Technology
The R&D Tax Aspects of Big Data
R&D Tax Credit Fundamentals
R&D Credits for Companies Combating Superbugs
Los Angeles Tech Boom Creates Large R&D Tax Incentive Opportunities
The R&D Tax Credit Aspects of Alzheimers
The R&D Tax Aspects of Software Development
The R&D Tax Aspects of Diabetes
The R&D Tax Aspects of Brain Mapping
R&D Tax Credit Aspects of Human Body Weight