In the final two weeks of 2021, Oracle announced plans to purchase Cerner for $28.3 billion, the tech giant’s largest acquisition to date. For years, Oracle had pockets of horizontal solutions skinned at the edges for healthcare, but this acquisition signifies the company’s entry into the industry as a major contender — inheriting one of the two largest electronic health records (EHR) vendors (the other one being Epic). While the price tag is exorbitant, Forrester believes this acquisition will accelerate much-needed innovation (at the industry level) over the next decade as Oracle jump-starts its cloud business and verticalizes, at depth, an integrated enterprise health cloud offering. Competition will heat up. In the short term, Cerner’s EHR can leverage Oracle’s cloud infrastructure. Over the long term, it’s about big data and more end-to-end functionality than in an enterprise health cloud.
Oracle currently lags behind Amazon, Microsoft, and Google in cloud market penetration overall — healthcare presents a sizable opportunity, as healthcare organizations (HCOs) are in the earlier phases in their migration to the cloud. According to Forrester, 40% of US healthcare life sciences infrastructure pros say that their primary cloud strategy is to move existing workloads to the public cloud. The acquisition also gives Oracle a seat at the table alongside tech titans Amazon, Google, Apple, and Microsoft, which have entered healthcare with varying degrees of success.
What This Means For HCOs
- Expect more vertical-rich functionality in enterprise health clouds in the future. Microsoft recently acquired Nuance for $19.7B to build out its health cloud. Oracle’s acquisition of Cerner is part of this larger industry trend toward verticalization of enterprise solutions in the cloud. Horizontal business applications — as mature as they are — don’t fully support industry-specific workflows that span the front and back office. For example, healthcare providers must track patient medications and services and manage a patient’s health journey across practitioners from initial diagnosis to long-term care. HCOs must decide which healthcare solutions to adopt and how much industry-specialized functionality to consume from the solution.
The addition of Cerner, a best-in-class EHR (already widely adopted), and other Oracle solutions such as data storage and processing, CRM, HCM, and ERP in a single, natively integrated health cloud will be compelling for HCOs, especially given the interoperability issues that still plague healthcare.
- Remember that EHR optimization must continue with proliferation in enterprise health clouds. The US government spent $36 billion on digitizing medical. While this unleashed vast amounts of data, the problem is that much of it is unstructured and siloed. Hospitals also have a complex web of EHR vendors. The average health system has 18 EHR vendors across all of its providers. A lack of interoperability frameworks prevents clinicians from getting a 360-degree view of patients throughout the care continuum. Moreover, “many health systems grossly underutilize the available functionality of their information system. This is due to many things, including poor implementation, poor or insufficient pre-implementation planning, and inadequate user training,” according to Steven Ton, associate instructor at UCF’s School of Global Health Management and Informatics.
Provider EHR workflows lie at the intersection of IT and clinical care delivery. These digital experiences directly affect both the clinical and the financial outcomes that healthcare delivery organizations generate. Simple misplaced clicks can, and have, cost lives. Continually improving these workflows is a key strategic priority that will lead to improved outcomes, physician satisfaction, and revenue recognition and will be an ongoing endeavor for HCOs.
- Look to health solutions that map to the future of healthcare. Forrester’s research on the future of healthcare calls out the top 10 areas in the US healthcare industry that will be most impacted over the next decade. While not unique to Cerner, the vendor touches a multitude of areas called out in Forrester’s research. These include clinician burnout, ambulatory EHR and practice management, behavioral health, community and critical-access hospitals, the new care continuum, data analytics, device connectivity, segments that support complex laboratory operations, patient engagement, performance improvement, pharmacy, and population health management. It will take time for Oracle to integrate Cerner, and there will be more enterprise health cloud vendors that will offer similar levels of functionality with tie-ins to other enterprise apps. The decisions HCOs make for their next leap into cloud needs to be strategic to accommodate the evolution that is occurring in healthcare today and over the next 10 years.
There will be ripple effects in the market from the Oracle-Cerner acquisition. The likelihood of an acquisition of Epic or another EHR vendor is a strong possibility over the next year, with tech companies looking to add more capabilities and data as they further verticalize their enterprise health clouds.
(Natalie Schibell, Eric Bellomo, and Paul-Julien Giraud contributed to this blog.)