In June 2022, software giant Oracle closed its deal to acquire the health IT vendor Cerner.
Valued at over $28B, the deal is one of the largest acquisitions by Oracle and anchors it firmly
within the healthcare industry. Larry Ellison proclaimed Oracle will address and solve some of
the major issues in healthcare by bringing the resources and technology of Oracle to Cerner and
the industry. While other organizations have tried, will this be one of the few times a large
company succeeds in changing the industry after entry through a large acquisition? Does Oracle
have the patience needed to transform healthcare if the Cerner business unit does not
immediately meet revenue and margin goals?
Oracle in Healthcare
In December 2019, Amazon Web Services (AWS) entered into a strategic alliance with Cerner to
become its preferred cloud services provider. This partnership touted the benefits of AWS’
artificial intelligence (AI) and machine learning (ML) capabilities, and at the time allowed Cerner
access to infrastructure hosting to expand its RHO services.
Given Oracle’s existing footprint and strategy with AI and ML, we do not expect Cerner’s
relationship with AWS to survive. Additionally, Oracle will be eager to shift Cerner’s remote
hosting clients to the Gen 2 Cloud platform. Oracle’s cloud offering holds promise to move
Cerner clients to a hyperconverged environment, yet we view the move from AWS to be gradual
as it waits for client contracts to expire. The move of Cerner’s systems to Oracle’s Gen 2 Cloud
may enhance Oracle’s overall competitive position against Amazon, Google, and Microsoft in the
Integration with Existing Services
With the acquisition of Cerner, Oracle can expand its software offerings, notably with its Oracle
Fusion ERP. Clients may be able to leverage an existing Cerner or Oracle relationship to reduce
costs by having a single partner for both EHR and ERP services, uniquely positioning Oracle
Cerner in the mid to large health system space. We foresee Oracle Cerner using the addition of
an EHR to enhance its ERP functionality to address specific healthcare needs, such as supply
integration, timekeeping, and advanced nurse scheduling.
Improvements to Cerner’s Platform
Excessive keystrokes and mouse clicks are two of the most common complaints by providers.
As communicated by Oracle, Cerner now has the opportunity to be the first hands-free EHR
through the integration of Oracle’s Digital Assistant, an AI voice recognition program. This has
the potential to be transformational and would allow providers increased face-to-face contact
with patients — time otherwise spent behind the computer. However, we do not see this coming
to fruition any time soon, as complex clinical workflows in an EHR system cannot easily be
reduced to voice commands.
While we are not necessarily predicting success, Oracle’s expertise in computer science and
software design, coupled with its revenue cycle experience in non-healthcare verticals, may
serve as a catalyst to improve Cerner’s revenue cycle shortcomings. Examples of how Oracle
can bring its might to bear to improve Cerner’s revenue cycle solutions include:
• Expertise in top-tier financial and computer science programming talent, as seen through
its Revenue Management and Billing products tailored to specific industries (e.g., health
insurance, banking, communications)
• Cost reduction through economies of scale stemming from the sheer size of Oracle
• Leveraging AI modules and analytics to provide direct point of care decision support to
augment a clinically driven revenue cycle solution
The healthcare segment can continue to benefit from technology advancement. This is aligned
squarely within Oracle’s core capabilities, especially with cloud computing, AI, and ML. With the
acquisition complete, we expect to see Oracle Cerner showcase how advanced solutions can
improve the health IT landscape.