As most readers know, Oracle Corp. recently agreed to acquire EHR giant Cerner for about $28.3 billion. Oracle has stated that it intends to leverage its existing tools to modernize Cerner’s systems and move them to its Gen2Cloud, a step which shouldn’t be too difficult given that Cerner already runs its key clinical system on an Oracle database.
This is reportedly the biggest acquisition in Oracle’s history and probably the biggest healthcare IT buyout by a tech giant on record as well.
The deal follows a couple of smaller but also significant healthcare acquisitions, including Amazon’s $753 million purchase of online pharmacy PillPack in 2019 and Microsoft’s $19.7 billion acquisition of Nuance Communications earlier this year.
I’m not surprised that Amazon was the first Big Tech player to see that it couldn’t outflank its way into the healthcare business. Amazon has proven time and again throughout its history that when it’s ready to dig into a market, it buys its way in. (The e-tailer’s acquisition of Whole Foods is just one example.)
Now, with Microsoft and Oracle stepping up to the plate, I’d argue that we’re seeing a larger shift in how the tech giants manifest their healthcare visions.
Mind you, I’m not suggesting that the Microsofts and Oracles of the world can control the healthcare industry just by buying high-profile players. There are a huge number of locked-in relationships that control the flow of healthcare services and technologies, and these relationships may transcend whatever loyalties health IT folk have to whoever now signs their paychecks.
Buying Cerner gives Oracle a much more visible seat at the health IT table, true. And as my esteemed colleague John Lynn points out, both companies focus on enterprise sales, which is a plus when it comes to working in harmony.
That being said, even this level of investment doesn’t guarantee Oracle’s success in healthcare. There are a few major pitfalls that Oracle could stumble into right away. For example, my guess is that if it tries too hard to foster its famously cutthroat sales approach at Cerner, it will turn off a share of both potential and existing Cerner customers.
This deal signals the start of a cycle which is likely to see some very big health IT deals being closed over the next couple of years. As noted above, I see the need to play to the healthcare business culture as a major constraint here, but it can be addressed. In this case, we’ll see whether Oracle is willing to stand back and let Cerner be Cerner.
As a former strategic consultant at Cerner, I expect the executives involved have little understanding of the degree of difficulty of the tasks they are facing. The level of complexity of healthcare IT is quite high on top of the still byzantine nature of healthcare organizations.
Realizing the happy talk of improving providers’ EHR experience will be much harder and take much longer than they have any inkling of.
Hi Joe,
That’s certainly how it looks to me. There’s a reason health IT has been so difficult for big tech players to attack from the outside.
Even as Cerner’s owner, Oracle will struggle to understand the full complexities of the business, not to mention the nuances of healthcare delivery culture.
-Anne