Implications of Cerner’s acquisition: Critical considerations, practical strategies
Making the decision about whether to replace an EHR system requires a meticulous review of several factors, none more important than the total cost of ownership.
When Oracle bought Cerner, I weighed in with several observations about the deal, citing the potential advantages each company could realize as well as the challenges both would need to surmount.
I followed that with a review of some of the issues (cloud services, revenue cycle management, voice recognition software, interoperability and legacy system migration) that need to be considered before measuring the ultimate value of the merger.
Now, I offer this assessment of some of the factors Cerner clients must consider as they decide whether to embrace Oracle’s vision for the company or to take their business elsewhere.
Cerner’s client losses and gains
Even before Oracle made its takeover proposal, Cerner reportedly was losing some clients.
More than two years ago, AdventHealth, with annual revenue of $20 billion, 50 hospital campuses, 80,000 employees and more than five million patients, replaced Cerner’s electronic health records system with Epic’s.
A month later, Atrium Health, with 40 hospitals and 900 care locations, announced that it was also moving to Epic’s EHR. Atrium was already using Epic’s revenue cycle platform.
And recently, NCH Healthcare System committed to transitioning its Cerner EHR system to an Epic system.
But it’s not all bad news for Cerner.
The company recently announced that it added 13 new clients in the first quarter of 2022 after attracting 71 new clients last year. Most of these transactions involve significant long-term commitments.
For example, Blanchard Valley Health System in Findlay, Ohio, is extending its relationship with Cerner for another nine years. Mountain Health Network in Huntington, W. Va., is adding eight years to its existing 15-year relationship with Cerner.
As current clients decide whether to remain with Oracle/Cerner or switch to another vendor, they need to be aware of the reasons some health systems have decided to move on. They must also take certain actions to protect their priorities – regardless of their decision.
Why some Cerner clients switched
Observations from health system representatives reveal common themes among Cerner customers making decisions on the firm’s software.
For example, AdventHealth’s decision to change to Epic was said to relate to ongoing dissatisfaction with Cerner’s ambulatory EHR solution and revenue cycle functionalities. AdventHealth is believed to have become convinced that their system’s needs had been pushed to the “back burner” when Cerner contracted to massive projects with the Departments of Defense and Veterans’ Affairs.
Atrium explained that its transition to Epic was a result of the health system’s geographic expansion and the view that its units would benefit from a single, integrated platform that promised to enhance clinician efficiency and satisfaction, according to published reports.
And in 2015, when the Mayo Clinic switched its business from Cerner to Epic. Its CIO stated that “an integrated EHR, across all of our organizations, can help up with the core mission of meeting patients’ needs. Practice convergence is our first-and-foremost goal. We also wanted to continue to do better and advance with revenue cycle management, to make bills easier to understand for patients and to address upcoming changes in reimbursement as we move from fee-for-service to value.”
The thread that is common to most of these decisions has been the desire for a system that integrates acute care and ambulatory EHRs and revenue cycle management that can enable implementation of population health solutions and value-based care agreements.
EHR replacement: Total cost of ownership
Across all vendors, making the decision to retain a particular electronic health record system or to convert to another system requires a meticulous review of several factors, none more important than the total cost of ownership, which can only be determined by a careful review of contractual obligations.
For example, it's essential to conduct an operational analysis of the Charge Description Master, with its list of procedures and products representing all services used by patients in a hospital setting, and the Enterprise Master Patient Index, which identifies patients across separate clinical, financial and administrative systems. With the data from these resources, the overall cost model provided the vendor can be leveraged to negotiate the best possible position on existing contracts.
Legacy data management
Healthcare organizations that decide to remain with Cerner may be faced with decisions about how much data ought to be retained should Oracle impose any changes.
If a Cerner user intends to move to another system, the same questions around data conversion and data retention will have to be answered.
And even when considering data management for more common situations, such as for the integration of information from one group of caregivers that becomes part of another group after a merger or acquisition, legal retention requirements will compel all data to be archived. Organizations need a management strategy for these contingencies.
The most difficult decision – and the most frequently faced – is how much data needs to accompany the transition to a new system.
When the question is posed to clinicians, the response most often given is, “Can we just bring it all?” And the answer is, unfortunately, “No.” It’s never feasible to migrate all data, for several reasons, including storage concerns or security measures or because not all data can be easily used.
Nevertheless, all data must be archived. In fact, data conversion and data retention are not mutually exclusive. Subsets of data should be converted from legacy systems to ensure clinical continuity. Archiving of all data should be performed to satisfy legal retention requirements. Further, data governance should be executed to assess data integrity, quality and usability.
A paramount task is to involve both clinicians and medical records departments in discussions about what data – and how much – is needed to seamlessly continue operations.
After data needs are assessed, the approach to migration should then be weighed.
Manual data abstraction or keying of data leads to mistakes that can compromise data quality. On the other hand, a data conversion can increase satisfaction by enabling end users to easily access and retrieve legacy data, regardless of the source. It can also serve as a training tool. As users are acclimated to the new system, data conversion can help keep productivity levels higher because there is not as much of a manual data entry requirement once live.
In addition, organizations should formulate a data archiving strategy that allows for legacy data retention. When transitioning clinical systems, it’s essential to evaluate the data that must be archived and equally crucial to assess the workflows driving interaction between systems.
Finally, successful healthcare data archiving with minimal risk requires preservation of the legal medical record (as defined by the organization), contextual audit trails, referenced data in ancillary systems, data change and version history, and even database metadata. A navigable audit trail is essential if an organization wants to relate the precise sequence of events; this trail provides evidence that justifies and/or explains what actions have occurred. It’s also vital to satisfy e-discovery requests.
Managing the transition
If an organization decides to implement a new EHR system, what will that entail and how should it be managed?
An important step is to select the best and brightest to manage the initiative. But it’s almost certain that there will be some gaps in their abilities to maintain and manage your legacy systems.
During transformations of this scope, legacy applications cannot be bundled into one conveniently accessible silo. They will need to be ticketed to different destinations. Some will carry forward; some will remain and some will be allowed to retire. All of them, however, will need support for a certain amount of time.
Because legacy applications will require attention, everyday IT operations are liable to experience glitches. Staff cannot devote their full focus to a new implementation when they are still managing day-to-day operations. Maintaining legacy applications leads to increasing dependency on those staff members with the necessary skills and institutional knowledge. It can add to the level of risk at the operational level because of the reduction in the number of employees with sufficient knowledge to handle the complexities of the existing system.
This expertise squeeze often drives an organization to outsource resources from an external partner. And when organizations transition to a new system, they often neglect prudent budget planning. Whether it’s because of backfilling or outsourcing or because staff is vulnerable to distraction and lack of focus as a result of doing more than one job, your total cost of ownership is highly susceptible to escalation.
It's essential to be able to evaluate the levels of expertise possessed by your current staff. It’s imperative that all activities be documented. Otherwise, organizations risk underestimating the number of resources they need. This can result in unplanned alterations in the original plan and scope of the migration, with significant alterations in the budget as well.
Because unanticipated work so often arises in these projects, organizations should create a contingency budget for additional resources simply to ensure sufficient staffing.
The entire process of transitioning to a new system can last two or more years, during which any number of unexpected circumstances can crop up. For example, reporting standards could change, patient safety issues could arise and key personnel could depart.
Change must be factored into your budget because, as the Oracle acquisition of Cerner shows – and as scores of other technological advances, political swings and business decisions demonstrate – change is guaranteed to occur.