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 basically? That is nonetheless to be seen, however one factor is for certain: It is a large deal.

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

Certainly, it is “up there with the biggest software program offers ever”: solely barely smaller than IBM’s mammoth $34 billion acquisition of Purple Hat in 2018 and larger 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 with the ability to interact with {industry} segments,” as IDC analyst Bob Parker instructed The New York Occasions. “And this places Oracle deeply right into a key a part of the healthcare enterprise.”

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

“Oracle was a late entrant to the cloud-infrastructure enterprise, and it trails AWS, Microsoft and Google by way of market share,” writes Ari Levy. “Removed from conceding defeat, [Larry] Ellison makes use of each alternative to tout Oracle’s cloud capabilities, often 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 effectively Oracle is ready to handle this “cloud-first technique for harnessing the ability of knowledge that sits outdoors of the digital well being document.”

As she famous in an announcement 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 may have its work lower out for it because it adjusts to a posh healthcare market with which it has restricted expertise.

“With ONC Remaining Rule in impact, 2022 would be the 12 months for large knowledge analytics to mature medical determination assist 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 gadgets. Digital well being document platforms should assist AI and ML to research exterior medical knowledge sources, steadiness sources, comprise prices, cut back waste and optimize medical workflows.

“Oracle might want to equip the digital well being document for better 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 knowledge that’s maintained on a longitudinal care document and exchanged securely.

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

“The actual fact stays that healthcare is certainly one of many {industry} sectors that large tech corporations 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 an announcement.

“The apparent query is whether or not the deal is nearly juicing the cloud computing enterprise for Oracle. It is value noting that Google and Apple had main setbacks 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 beneath.

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

“One of many issues is Cerner is in the midst 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 sources, and bandwidth, and every little thing else that they will need to dedicate to that train, ought to that come to move? And can that imply a lack of concentrate on their clients?

“The opposite factor, after all, is what new services and products is Oracle going to attempt to promote to sure clients,” he added. “The press launch was very clear about at the least one factor that Oracle appears to be very eager on, and that’s to attempt to promote their voice recognition software program [Voice Digital Assistant], which Oracle thinks goes to make an enormous distinction in decreasing 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 take a look at different conventional Oracle merchandise and take into account them on high of the Cerner platform. They will have some decisions in entrance of them, particularly in the event that they’re utilizing a distinct software program,” he stated. 

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

“Are they going to need to shift over to some Oracle-owned voice recognition know-how? And the way good is it, actually? As a result of once we speak about voice-recognition know-how, Oracle will not be the primary identify that involves thoughts,” he stated.

“This one’s fairly monumental”

Consider it or not, nonetheless, the synergies between Oracle and Cerner are obvious sufficient {that a} merger of some type has been mentioned for years – at the least 13 years, in truth. John Moore, founder and managing companion of Chilmark Analysis penned a weblog submit, approach again in June 2008, titled, “Oracle + Cerner = Alternative?”

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

A lot of what I stated again then, holds true as we speak.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, nonetheless, Moore says the concept of an acquisition grew to become 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 making an attempt 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 current earnings name, the place Larry Ellison stated “monetary companies and healthcare have been going to be vital industries for his or her public cloud,” he stated. “And I believe buying Cerner permits that functionality, to change into extra industry-specific with the general public cloud companies that they will offer, and so they could do one thing related within the monetary realm, to construct out that.”

This deal is “an instance of sort of beginning with an current 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 effectively. Humana and Epic’s partnership, they’re utilizing AWS in addition to sort of the go-between. So it is an attention-grabbing market proper now, as every little thing transitions to cloud environments. That is the following battleground.”

As for Cerner shoppers, Moore surmises that their response to the deal is basically 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 doubtlessly disruptive cloud transitions in an already busy data-management setting.

“It will depend on the place I am at with Cerner by way of the deployment of their options in a cloud setting versus not,” he stated. “If I used to be a Cerner consumer utilizing HealtheIntent, which is dwell on AWS, I might say, ‘Do not mess with that. Simply go away it. We’re utilizing these instruments. We’re utilizing HealtheIntent in that capability, and we have loaded our knowledge into AWS. Do not screw round with that.’

“I do not assume they’ve gotten very far on the AWS Millennium transition, so I imagine there will be much less concern amongst the consumer base with reference to Millennium, however I believe over time it’s going to ultimately transition every little thing over to Oracle. However how does Cerner handle that transition?

“And I believe if I have been a buyer, I would say, it is Oracle. You’ve got obtained numerous expertise within the fintech enviornment. Get this [revenue cycle management] factor mounted 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 workforce at Epic considering proper now?

“I am fairly certain they’re having very combined 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 unbiased,'” stated Moore.

“I believe in one other approach, definitely, they will be cheering it as a result of it will create a little bit of confusion within the Cerner consumer base and will end in additional decline in Cerner’s market share,” he added. “But when I used to be Epic, I would even be just a little apprehensive 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, at the least.

“There additionally could also be just a little little bit of a unhappiness, in that it is sort of an finish of an period,” he stated, by way of competitors.

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

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

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

Twitter: @MikeMiliardHITN

E-mail the author: mike.miliard@himssmedia.com

Healthcare IT Information is a HIMSS publication.