Only the lower end, small hospitals are making competitive EHR decisions anymore. It's Meditech for hospitals with no money, Epic for the money-flush or affiliated, Cerner for those in between. Cerner's main fixed costs for this market are licensing and cloud servers, which Oracle can provide. Maybe they can get cost-competitive with Meditech, who has higher implementation labor costs. At some point post-Poppalardo founder/major share holder, the stasis at Meditech will break by selling to Oracle/PE, going bankrupt, losing a major lawsuit, being acquired by a consortium of customers lead by HCA, or just the slow attrition of customers. Oracle will wait for Northwell to leave Allscripts then buy the Allscripts hospital division for super cheap. Epic will grow increasingly concerned about anti-trust (notice they've already stopped slogans like world domination or data about what percentage of the hospital market they have in what states.) Oracle is much better at being tight with the gov, so will have a defensible position in the market due to antitrust and a preferred bid on any future gov projects plus willingness to outsource to India. After Epic exhausts the supply of hospitals willing to convert, they'll stop making as much profit vs antitrust risk and will even further turn their focus outside the hospital market. Almost all hospital software improvement/innovation will stop until a paradigm changing shift happens in the country's healthcare system. In 15 years, I start a consulting company selling remarkably minor software improvements to captive hospitals and make a killing.
Khyber Pass - 3 years ago
Though not at all a precise or direct analogy, I've come to think about the American healthcare space as kind of like Afghanistan.
Like the people in Afghanistan, it's fractious, complex, drugs are everywhere, departments are fighting each other instead of cooperating, and a lot of people are dying for stupid and preventable reasons. And, with COVID, we similarly see large numbers of people either dying or having their lives constrained because they believe in fairy tales that don't jibe with the modern world.
It's due to these various conundrums that Afghanistan has been called The Graveyard of Empires. Several large, strong outside powers have waltzed in, swaggering with confidence, and buoyed by enormous war chests. And then they find trouble, because nobody who lives in the country even understands how to make it work, and they sure aren't going to tell you even if they did.
We have a few key players that managed to get established when they were small and nimble in HIT. Kind of like an insurgent force. Cerner was one of those that grew to occupy a wide swath of the market, and appears to have been struggling with its decades-long occupation. Here comes Oracle from the outside.
The mistakes that got made in Afghanistan were largely due to the terrain itself being hard, kind of like the terrain of healthcare is hard. Then you have the competition between tribes (aka between vendors and between hospital systems). And there's all this new language to learn. And people you need to convert to your cause. And it can sure be hard to maintain focus if this is an expedition, and your primary business concerns are elsewhere. Will HIT get the focus it needs?
What I'm trying to say is that I hope Oracle is thinking about these things now. They have all kinds of talent, money, resources, and influence. They don't have to fail. Some armies have succeeded in Afghanistan. I'd like for Oracle to succeed. This is an industry that needs healthy competition if we're really going to improve care delivery. But they better have their eyes open.
Remember that healthcare is the Graveyard of Corporations. It's the quicksand that an arrogant outsider will invariably get stuck in if they're not really, really prepared. Please get prepared.
Frank - 3 years ago
In the long run better because Oracle will blow it just like all the other Fortune 100 acquisitions over the last 50 years. As that happens most of the clients will run to Epic, clearly a better system. Unfortunately in the short run (next few years) there will be some pain.
Alan Eisman - 3 years ago
In the short run Cerner shareholders and insiders will get rich, in the long run long run Oracle will hasten Cerner's decline. Oracle does infrastructure software and cross industry financial software (mostly through acquisition) well but that will not mix with Cerner, that needs to be acutely focused on healthcare specific drivers and requirements. Oracle will be impatient and will quickly move from investing in healthcare to milking Cerner's recurring revenue streams and Cerner's significant decline in market share vs. EPIC will accelerate.
Leaving KC for Austin - 3 years ago
This is likely the clash of two cultures. Both are sales-focused, and one does not understand the long sales cycle of health care. They appreciate architecture and maybe have learned something from the Fusion evolution. With an evolving focus on cloud and analytics, as others have noted, there is a significant risk of a focus on underlying architecture consistency at the cost of new features. While this could this up to be a better mousetrap, the ground lost may be irreversible.
rashaverak - 3 years ago
It would take a wholesale shift in Cerner's culture to shift Cerner's practices and effectiveness. Changing from a sales-driven culture to a 'products-first' culture would be Job #1. Short of Cerner being completely absorbed into the Oracle Borg - which in itself will not guarantee a more product-driven culture - it will be business as usual.
Mike - 3 years ago
I think this is the beginning of the end for Cerner. Infrastructure is secondary to features and all this change over at Cerner is going to slow the deployment of things that affect patient care and hospital revenue cycle. I give it a 15 year decline before Cerner looks like McKesson Horizon did a few years ago and it gets sold for parts.
Eric - 3 years ago
Cerner may change some around cloud infrastructure and data products. Healthcare is too big to be noticeably affected.
Is that JB with the afghanistan metaphor again?
Only the lower end, small hospitals are making competitive EHR decisions anymore. It's Meditech for hospitals with no money, Epic for the money-flush or affiliated, Cerner for those in between. Cerner's main fixed costs for this market are licensing and cloud servers, which Oracle can provide. Maybe they can get cost-competitive with Meditech, who has higher implementation labor costs. At some point post-Poppalardo founder/major share holder, the stasis at Meditech will break by selling to Oracle/PE, going bankrupt, losing a major lawsuit, being acquired by a consortium of customers lead by HCA, or just the slow attrition of customers. Oracle will wait for Northwell to leave Allscripts then buy the Allscripts hospital division for super cheap. Epic will grow increasingly concerned about anti-trust (notice they've already stopped slogans like world domination or data about what percentage of the hospital market they have in what states.) Oracle is much better at being tight with the gov, so will have a defensible position in the market due to antitrust and a preferred bid on any future gov projects plus willingness to outsource to India. After Epic exhausts the supply of hospitals willing to convert, they'll stop making as much profit vs antitrust risk and will even further turn their focus outside the hospital market. Almost all hospital software improvement/innovation will stop until a paradigm changing shift happens in the country's healthcare system. In 15 years, I start a consulting company selling remarkably minor software improvements to captive hospitals and make a killing.
Though not at all a precise or direct analogy, I've come to think about the American healthcare space as kind of like Afghanistan.
Like the people in Afghanistan, it's fractious, complex, drugs are everywhere, departments are fighting each other instead of cooperating, and a lot of people are dying for stupid and preventable reasons. And, with COVID, we similarly see large numbers of people either dying or having their lives constrained because they believe in fairy tales that don't jibe with the modern world.
It's due to these various conundrums that Afghanistan has been called The Graveyard of Empires. Several large, strong outside powers have waltzed in, swaggering with confidence, and buoyed by enormous war chests. And then they find trouble, because nobody who lives in the country even understands how to make it work, and they sure aren't going to tell you even if they did.
We have a few key players that managed to get established when they were small and nimble in HIT. Kind of like an insurgent force. Cerner was one of those that grew to occupy a wide swath of the market, and appears to have been struggling with its decades-long occupation. Here comes Oracle from the outside.
The mistakes that got made in Afghanistan were largely due to the terrain itself being hard, kind of like the terrain of healthcare is hard. Then you have the competition between tribes (aka between vendors and between hospital systems). And there's all this new language to learn. And people you need to convert to your cause. And it can sure be hard to maintain focus if this is an expedition, and your primary business concerns are elsewhere. Will HIT get the focus it needs?
What I'm trying to say is that I hope Oracle is thinking about these things now. They have all kinds of talent, money, resources, and influence. They don't have to fail. Some armies have succeeded in Afghanistan. I'd like for Oracle to succeed. This is an industry that needs healthy competition if we're really going to improve care delivery. But they better have their eyes open.
Remember that healthcare is the Graveyard of Corporations. It's the quicksand that an arrogant outsider will invariably get stuck in if they're not really, really prepared. Please get prepared.
In the long run better because Oracle will blow it just like all the other Fortune 100 acquisitions over the last 50 years. As that happens most of the clients will run to Epic, clearly a better system. Unfortunately in the short run (next few years) there will be some pain.
In the short run Cerner shareholders and insiders will get rich, in the long run long run Oracle will hasten Cerner's decline. Oracle does infrastructure software and cross industry financial software (mostly through acquisition) well but that will not mix with Cerner, that needs to be acutely focused on healthcare specific drivers and requirements. Oracle will be impatient and will quickly move from investing in healthcare to milking Cerner's recurring revenue streams and Cerner's significant decline in market share vs. EPIC will accelerate.
This is likely the clash of two cultures. Both are sales-focused, and one does not understand the long sales cycle of health care. They appreciate architecture and maybe have learned something from the Fusion evolution. With an evolving focus on cloud and analytics, as others have noted, there is a significant risk of a focus on underlying architecture consistency at the cost of new features. While this could this up to be a better mousetrap, the ground lost may be irreversible.
It would take a wholesale shift in Cerner's culture to shift Cerner's practices and effectiveness. Changing from a sales-driven culture to a 'products-first' culture would be Job #1. Short of Cerner being completely absorbed into the Oracle Borg - which in itself will not guarantee a more product-driven culture - it will be business as usual.
I think this is the beginning of the end for Cerner. Infrastructure is secondary to features and all this change over at Cerner is going to slow the deployment of things that affect patient care and hospital revenue cycle. I give it a 15 year decline before Cerner looks like McKesson Horizon did a few years ago and it gets sold for parts.
Cerner may change some around cloud infrastructure and data products. Healthcare is too big to be noticeably affected.