Trade analysts react to Oracle’s big-ticket Cerner purchase

What is going to the Oracle-Cerner acquisition introduced on Monday imply for the businesses, their shoppers and for healthcare normally? That is nonetheless to be seen, however one factor is for positive: It is a large deal.

As CNBC famous, the $28.3 billion Oracle paid for the well being IT large is “monumental” – thrice as dear as the corporate’s next-biggest deal, its 2005 acquisition of PeopleSoft for $10.3 billion.

Certainly, it is “up there with the most important software program offers ever”: solely barely smaller than IBM’s mammoth $34 billion acquisition of Purple Hat in 2018 and greater than Microsoft’s $20 billion acquisition of Nuance earlier this 12 months.

However there are good causes for that type of sizable funding.

“The way forward for enterprise software program is having the ability to have interaction with {industry} segments,” as IDC analyst Bob Parker informed The New York Instances. “And this places Oracle deeply right into a key a part of the healthcare enterprise.”

Oracle is clearly very fascinated with Cerner’s cloud enterprise, given the EHR vendor’s expansive relationship with Amazon Net Companies, CNBC factors out, and its Mission Apollo initiative, constructed on AWS infrastructure.

“Oracle was a late entrant to the cloud-infrastructure enterprise, and it trails AWS, Microsoft and Google when it comes to market share,” writes Ari Levy. “Removed from conceding defeat, [Larry] Ellison makes use of each alternative to tout Oracle’s cloud capabilities, sometimes on the expense of AWS. There’s each purpose to imagine that Ellison sees Oracle’s cloud because the eventual residence for an excellent chunk of Cerner’s future migration.”

Forrester senior analyst Natalie Schibell, in the meantime, sees potential for fulfillment, however it will likely be determined by how properly Oracle is ready to handle this “cloud-first technique for harnessing the facility of knowledge that sits outdoors of the digital well being report.”

As she famous in a press release despatched to Healthcare IT Information, “an Oracle-Cerner deal would require Oracle to push the throttle on Cerner’s transfer to the cloud to drive a brand new paradigm of data-driven healthcare.”

Oracle could have its work lower out for it because it adjusts to a posh healthcare market with which it has restricted expertise.

“With ONC Ultimate Rule in impact, 2022 would be the 12 months for giant information analytics to mature medical determination help and personalization,” stated Schibell. “The rise of consumerism and value-based care will end in a surge of knowledge from client wearables and distant affected person monitoring units. Digital well being report platforms should help AI and ML to investigate exterior medical information sources, steadiness assets, comprise prices, scale back waste and optimize medical workflows.

“Oracle might want to equip the digital well being report for larger utilization of digital care, together with the shift of acute care into the house,” she added. “A forward-thinking cloud technique should underpin data-sharing with interoperable information that’s maintained on a longitudinal care report and exchanged securely.

“Leveraging the facility of knowledge is simply as vital as holding it safe. As Oracle makes an attempt to make an even bigger footprint within the well being care sector, its funding in cybersecurity should additionally exponentially develop.”

“The actual fact stays that healthcare is one among many {industry} sectors that large tech companies serve, and it stays to be seen how a lot administration consideration will go into constructing out the EHR footprint that Cerner brings into the combo,” stated Paddy Padmanabhan, founder and CEO of Damo Consulting, in a press release.

“The plain query is whether or not the deal is nearly juicing the cloud computing enterprise for Oracle. It is price noting that Google and Apple had main setbacks just lately within the healthcare house, so success is not foretold.”

In a subsequent interview with HIMSS TV Padmanabhan stated he is taking a wait-and-see method. Watch it right here, and embedded under.

“I have been speaking to a few of our shoppers and a few of my connections within the {industry} as properly, and there are a number of issues to unpack from this,” he stated.

“One of many issues is Cerner is in the course of a migration with AWS. Is that now going to cease, and is that now going to shift over to Oracle? And what does that imply for Cerner as a corporation and the quantity of assets, and bandwidth, and all the pieces else that they’ll must commit to that train, ought to that come to move? And can that imply a lack of give attention to their clients?

“The opposite factor, in fact, is what new services is Oracle going to try to promote to sure clients,” he added. “The press launch was very clear about a minimum of one factor that Oracle appears to be very eager on, and that’s to try to promote their voice recognition software program [Voice Digital Assistant], which Oracle thinks goes to make a giant distinction in lowering the burden amongst physicians. And that was in every single place, it was talked about greater than as soon as within the press launch.

“So clients are going to be anticipated to have a look at different conventional Oracle merchandise and take into account them on high of the Cerner platform. They are going to have some selections in entrance of them, particularly in the event that they’re utilizing a distinct software program,” he stated. 

The plain one which involves thoughts, he stated, is Nuance.

“Are they going to must shift over to some Oracle-owned voice recognition expertise? And the way good is it, actually? As a result of once we discuss voice-recognition expertise, Oracle will not be the primary title that involves thoughts,” he stated.

“This one’s fairly monumental”

Consider it or not, nevertheless, the synergies between Oracle and Cerner are obvious sufficient {that a} merger of some type has been mentioned for years – a minimum of 13 years, actually. John Moore, founder and managing associate of Chilmark Analysis penned a weblog publish, method again in June 2008, titled, “Oracle + Cerner = Alternative?”

On the @Oracle @Cerner deal am reminded of a chunk I wrote method again in 2008 trying on the prospects of such a wedding.

A lot of what I stated again then, holds true in the present day.https://t.co/r4QDa0lc0i

— John Moore (@john_chilmark) December 22, 2021

In fact, in 2008, Cerner’s founding CEO Neal Patterson was nonetheless captain of the ship, and Moore says it is unlikely he would have gone for such a deal. “He was a visionary,” stated Moore in an interview with Healthcare IT Information. “And he had a agency hand on the tiller.”

After Patterson’s loss of life from most cancers in 2017, nevertheless, Moore says the concept of an acquisition turned more likely: “It was only a matter of when, and who would provide you with one thing.”

And Oracle was a logical suitor, he stated: “They’re attempting to get this public cloud enterprise going. They and IBM have actually been sluggish to behave on this, and Microsoft, Amazon, and to a lesser extent, Google have actually capitalized on that as a result of that is the place the development is.”

Moore recollects a latest earnings name, the place Larry Ellison stated “monetary providers and healthcare had been going to be vital industries for his or her public cloud,” he stated. “And I believe buying Cerner permits that functionality, to develop into extra industry-specific with the general public cloud providers that they’ll offer, they usually might do one thing related within the monetary realm, to construct out that.”

This deal is “an instance of form of beginning with an present buyer base and a platform, a la Cerner, to construct from,” he defined. “Whereas, for instance, at Amazon/AWS, they have Anthem constructing their AWS platform, Anthem constructed Well being OS. In order that’s labored out fairly properly. Humana and Epic’s partnership, they’re utilizing AWS in addition to form of the go-between. So it is an fascinating market proper now, as all the pieces transitions to cloud environments. That is the following battleground.”

As for Cerner shoppers, Moore surmises that their response to the deal is essentially in keeping with that of different observers: Wait and see. However he says most of them will definitely be hoping to keep away from large and probably disruptive cloud transitions in an already busy data-management setting.

“It will depend on the place I am at with Cerner when it comes to the deployment of their options in a cloud setting versus not,” he stated. “If I used to be a Cerner shopper utilizing HealtheIntent, which is reside on AWS, I’d say, ‘Do not mess with that. Simply depart it. We’re utilizing these instruments. We’re utilizing HealtheIntent in that capability, and we have loaded our information into AWS. Do not screw round with that.’

“I do not suppose they’ve gotten very far on the AWS Millennium transition, so I imagine there will be much less concern amongst the shopper base almost about Millennium, however I believe over time it’ll ultimately transition all the pieces over to Oracle. However how does Cerner handle that transition?

“And I believe if I had been a buyer, I might say, it is Oracle. You have bought loads of expertise within the fintech enviornment. Get this [revenue cycle management] factor fastened as soon as and for all. RevElate is one thing that lots of people have hope for,” Moore stated.

And what are Judy Faulkner and her staff at Epic pondering proper now?

“I am fairly positive they’re having very blended emotions about it. I imagine that Judy would in all probability be feeling like, ‘I am glad I put collectively the belief I’ve, to maintain Epic impartial,'” stated Moore.

“I believe in one other method, definitely, they will be cheering it as a result of it should create a little bit of confusion within the Cerner shopper base and should end in additional decline in Cerner’s market share,” he added. “But when I used to be Epic, I might even be a bit of anxious about, ‘With Oracle’s breadth and depth internationally, are we going to have a more durable time getting accounts abroad?’ As a result of that is the place the expansion market is for EHRs, a minimum of.

“There additionally could also be a bit of little bit of a unhappiness, in that it is form of an finish of an period,” he stated, when it comes to competitors.

Epic, he stated, has “at all times been very customer-focused, however holding that drive alive, to proceed to out-innovate, past what opponents are doing, or anybody else, to serve their shopper base, as a result of now there isn’t any sturdy opponents there,” could also be difficult.

One factor is certain – that is nonetheless “very a lot a growing story,” stated Moore.

“It may be some time earlier than we determine precisely what is going on on right here. However I believe the repercussions to the broader {industry} are fairly vital in comparison with loads of different large acquisitions we have seen up to now decade or so. This one’s fairly monumental.”

Twitter: @MikeMiliardHITN

Electronic mail the author: mike.miliard@himssmedia.com


Healthcare IT Information is a HIMSS publication.

You may also like...