7 Thoughts on the Oracle Acquisition of Cerner and what it may mean for the Healthcare Industry
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With the news of the $28B acquisition of Cerner by Oracle, I have fielded several questions regarding what I think this means for Cerner, Oracle, and the healthcare industry. Here are my immediate thoughts:
1. One of the most significant challenges Cerner faces is its lack of a robust revenue cycle solution that integrates with its clinical platform. The recent announcement regarding their RevElate solution was aimed at addressing this need.
I have spoken with numerous CIO’s who, at some point in time, made a move away from Cerner to Epic. Most CIO’s stated that the revenue cycle platform was the main driver that prompted the discussions with Epic or led their organizations to eventually make the change. How does Oracle plan to address this? I firmly believe this single issue will determine Cerner’s eventual success or failure.
2. Cerner has publicly stated that their 3-5 year plan is to move all of their solutions to AWS cloud hosting to take advantage of more robust analytics. Cerner’s HealtheIntent solution is already hosted at AWS. Plans are in motion to move the Millennium platform to AWS, and Cerner has been actively having discussions with their customers along these lines.
In the press release by Oracle, it is clear that Oracle intends to host the Cerner solutions within their Oracle Gen 2 cloud. This migration would take years to fully complete and would require Cerner to move their HealtheIntent platform and abandon the move to AWS for the clinical platform. It will be interesting to see the roadmap for this change and understand the overall timing.
3. With this acquisition, Oracle is now responsible for the VA and DOD Cerner rollout. The rollout has not gone as expected, depending on what accounts you read, including testimony before Congress. This entire project is riddled with politics, government bureaucracy, and lack of provider buy-in due to replacing a popular EHR platform that is already in use.
No matter how many resources are allocated to this project, this is a recipe for a challenging rollout. Oracle now has to wade headfirst into this arena during a time when the rollout is not viewed as going according to plan.
4. Oracle is recognized as being the leader in the ERP space, in part through the acquisition and subsequent improvements with PeopleSoft.
The acquisition of Cerner creates an interesting value proposition for healthcare organizations. Perhaps Oracle can find some way to bundle and more tightly integrate the ERP system with the EHR system. Tighter integration between these two systems may allow Oracle to increase its ERP solutions’ footprint. It will be interesting to see what comes out of this in the future.
5. The healthcare industry is risk-averse and does not like uncertainty. For existing Cerner customers who were already considering a discussion with Epic (for whatever reason), this news may be enough to prompt those organizations to reach out to Epic now. I would not be surprised if, short term, this accelerates the pace of organizations moving from Cerner to Epic.
As long as Epic continues to be viewed as the stable solution, this may be enough for healthcare organizations to consider making the switch. It will be incumbent on Oracle to provide effective communication to the existing Cerner customers and the entire industry. If this acquisition leads to further uncertainty in the future, look for Epic to gain more clients.
6. Although companies frequently cite innovation as a benefit from mergers and acquisitions, my experience has been that this is not what happens, at least initially. Acquisitions create a lot of uncertainty for employees at both organizations. New leadership, teams, processes, cost-cutting, and procedures are usually the immediate focus areas during an acquisition - not innovation.
At a time when innovation is critical to the future success of healthcare organizations, Oracle will need to find a way to remove the distractors and quickly promote innovation. This will be a challenging task given the size of both organizations and all of the details that need to be worked out first. If this creates a vacuum, watch for other organizations to step up and fill this innovation void.
7. In the press release, Oracle stated, “Under the deal, Oracle will also make its hands-free voice assistant the primary interface to Cerner’s clinical systems, allowing clinicians to make commands in the EHR via voice instead of typing on the computer keyboard.”
This is a very interesting goal to place in a press release. For example, Nuance has been in the healthcare dictation space for many years. They are viewed as the leader in this area. While they have a pretty robust dictation solution, they are not ready to replace the keyboard and mouse input within the EHR. The EHR’s are not built to navigate via voice due to all the tabs, data entry cells, alerts, etc., that the providers utilize for charting. If the goal is truly a hands-free experience, I do not see how this is accomplished without completely changing the Cerner EHR. It will be interesting to see where Oracle decides to take this in the future and how much of the EHR they will be able to claim is hand-free usage.