Is this how big tech gets into healthcare?
Some big tech companies have been eyeing Healthcare for a while. Amazon and Microsoft, to name just two, have made moves into the space with cloud services that hospitals or other big players could use. But Oracle has taken a big step in the industry by acquiring Cerner Corporation for $28 billion.
According to Reuters, Oracle will acquire all Cerner's shares through an all-cash tender offer at $95 per share; this is approximately $28 billion in equity value.
Bolster cloud business
Cerner has chosen to partner with Amazon AWS, their cloud of choice. This acquisition will most certainly alter the Amazon relationship as I anticipate it will move to Oracle's cloud.
The problem arises over whether this is an unattainable objective or a legitimate aspiration. Most of Cerner's EMR is based on outdated development and proprietary code that does not work well in today's cloud systems. Putting the Cerner EMR systems into the Oracle cloud may require a software redesign. Without a change in the software architecture, all that is taking place is adding infrastructure to Oracle's data center that may not contain all the cloud benefits. Oracle will also utilize this as an opportunity to bolster its lagging cloud performance.
Pay to get into Healthcare.
Big technology has had difficulty breaking into the healthcare sector. We've seen attempts from Amazon and Microsoft, but this is one of Oracle's most aggressive campaigns.
I'd advised big tech to acquire a hospital to learn how technology may help with efficiencies and automation from an insider's perspective. The purchase of an EMR software company is close to purchasing a hospital since it is the perfect approach to gaining access to existing hospital patients. The problem now is that many healthcare organizations are considering moving away from Cerner; will this acquisition by Oracle speed up the system change or persuade health systems to give Cerner another chance?
ERP trend in Healthcare
Healthcare ERP is catching fire because many organizations are in the market for a next-generation cloud ERP solution. Healthcare ERP is dominated by three vendors: Oracle, Workday, and Infor. This acquisition makes sense because it will allow Cerner to leverage its current Cerner hospital relationship to cross-sell the Oracle cloud ERP product line.
I hope that existing Cerner clients experience interoperability with Oracle ERP for health systems to focus on taking care of the patients at the lowest cost.
Data is the new oil
This is also a data play for Oracle by accumulating a massive amount of healthcare data from Cerner.
Cerner has created a department that unites data business and Kantar Health's data, analytics, and research abilities to help accelerate the discovery, advancement, and deployment of drugs as well as clinical research.
New treatments can now take, on average, 17 years and $2.5 billion to reach patients. The objective is to use its data and research capabilities to unlock the power of data and a network of research-ready health systems to get therapies to patients at the lowest possible cost.
Oracle has the world's largest third-party data marketplace, and the addition of healthcare data is precious. It will be interesting to see how the team uses the latest Oracle solutions to tackle healthcare data analytics.
Will we finally see a big tech company crack Healthcare?
We will need time to see how the two companies integrate, and most important is whether the two technology solutions will be integrated vs. functionality as a standalone product.
The growth of Oracle has been minimal in the last few years, and I am aware of many health systems loving away from Cerner's EMR system before this announcement. The slow growth of Oracle coupled with Cerner losing some of the EMR market shares may not be a winning formula. I hope this acquisition brings the accelerated disruption needed to automate the healthcare operating model.