In making its biggest purchase to acquire Cerner, Oracle is ready to transform the healthcare industry with a slew of new technologies that play to its strengths in database and enterprise applications.
Following the completion of its $28-billion purchase of Cerner, Oracle outlined a number of initiatives including the use of artificial intelligence modeling for disease management, and digital assistants for better practice management and patient engagement. The vendor also highlighted how Cerner’s EHR systems integrated with Oracle Fusion Cloud Applications could help healthcare customers manage their workforce and schedule health practitioners while enabling them to leverage the latest procurement, blockchain, and RFID solutions when authenticating and ordering medical supplies.
At the heart of its new health management system strategy, Larry Ellison, chief technology officer of Oracle, calls for the creation of a national Electronic Health Record Database that will allow doctors to have instant access to disparate electronic medical records or in some cases disjointed systems. Privacy will be ensured because only patients can hold the key to release their health data, Ellison added.
It is a tall order given the fact that Cerner is among a dozen leading vendors still duking it out with one another since 2010 over coding and semantic issues that prevent true data portability and interoperability across different EHR systems. Still, the combination of Oracle and Cerner could tip such standards issues in its favor because of Cerner’s increased successes among rural hospitals that are attracted to its affordable pricing along with the extra benefits of a new generation of Cloud database, platform and infrastructure products that Oracle can deliver in one bundle.
Another Trojan Horse that Oracle can use to expand its presence in the healthcare vertical is its ability to improve patient engagement after years of investing heavily in clinical trial systems since its acquisitions of ClearTrial, PhaseForward, Relsys and now Cerner Enviza, formerly Kantar Health for real world patient data. Ellison cites the recent success of its v-safe program that enables the US government to monitor Covid vaccine recipients for any known side effects as the impetus for enhanced patient engagement.
What that amounts to is the possibility that Oracle Cerner will have the domain expertise to bring a larger set of patient engagement solutions that enable providers to receive continuous updates on clinical trials and/or patient vital signs via wearables and smart phones, positioning itself as the best defense against another global health crisis.
Mike Sicilia, EVP of Industries at Oracle, suggests that the next frontiers of healthcare lie in delivering simple to use healthcare, clinical and patient engagement platforms – all connected to help tackle the most complex diseases. In other words, the acquisition of Cerner may mean more than winning the EHR battle, but rather the ultimate goal of leveraging Oracle database and apps for effective disease management.
Steven Miranda, executive vice president of Oracle, said currently dozens of healthcare customers are already leveraging Oracle Fusion Cloud Applications for finance, HR and supply chain to improve patient outcome by better managing and scheduling their employees, in addition to helping them track the use of surgical supplies, medications and tools through Cloud-based supply chain management.
Additionally, what Oracle Cerner aims for is the expansion of its contracts with two of its biggest customers – US Department of Defense and US Department of Veterans Affairs. With multi-year programs that represent nearly $1 billion in annual revenue, these departments continue to expand the rollout of EHR systems that cover millions of military personnel and veterans, something that Oracle Cerner will be able to replicate for other government agencies globally.
Such contributions will result in bringing Oracle somewhere between $5 billion and $6 billion in incremental revenues for its fiscal 2023, taking its top line to the $50-billion range through the middle of the decade.
Since 2005, Oracle has embarked on an ambitious campaign to remake the company from a database-only provider to a $40-billion behemoth that is considered the leading vendor in such product categories as Cloud ERP and verticals including financial services, retail, construction and utilities.
The acquisition of Cerner puts Oracle one step closer to compete head-on with Microsoft to become the No. 1 healthcare applications provider by combining its vaulted database with Cerner’s EHR, imaging, practice and revenue cycle management apps, not to mention the use of the latest Cloud technologies from digital assistants to workforce health analytics to drive better patient outcome.
It comes at a steep price since Oracle initially offered $92 a share in November 2021 and Cerner demanded more, ending up paying $95 one month later at the peak of the long-running bull market, which has been battered in 2022 because of the war in Ukraine amid a hyperinflationary environment.
The combination of Oracle and Cerner marks a new beginning for both companies with the former searching for the antidote to the pandemic as governments, providers and life sciences companies all clamoring for better data quality, faster clinical trials as well as more efficient ways to deliver urgent and ambulatory care through end-to-end automation.
Oracle will breathe new life into Cerner, which has struggled to articulate its vision on a global level in recent years. The pandemic caused some of its clients to postpone their projects, resulting in a 2% drop in revenue for 2020. That was followed by a 5% growth in 2021 as sales rebounded with contributions from Kantar Health.
Cerner’s ownership under Oracle will bring stability and continuous improvement across the extensive portfolio, something that the database vendor is famous for. That is particularly important as Cerner will curtail its use of Amazon Web Services and start moving its workload to the Oracle Cloud Infrastructure, eliminating unnecessary IT expenses that ultimately will benefit its customers.