Oracle proposed buy of Cerner highlights rapid shift to the cloud
The purchase underscores rapid movement of healthcare applications to cloud environments, but transitioning Cerner to the cloud will take time.
With Oracle’s $28.3 billion pending acquisition of Cerner, many industry experts have described the potential deal as a tipping point for the use of the cloud in healthcare. However, the agreement is more likely a lagging indicator in a market that began to shift rapidly toward the use of the cloud years ago.
Market analyst firm ResearchandMarkets predicts that the global healthcare cloud infrastructure market will expand at a compound annual growth rate of 16.7 percent over the next few years and is estimated to reach $142 billion by 2028.
“Forward-thinking CIOs need to embrace the cloud,” says healthcare executive and industry CIO David Chou. “Right now, we see only point solutions, but by using the cloud, health system CIOs can explore their options and get the broader-based solutions they need.”
In announcing the possible deal, Oracle said that it expects to see Cerner servers running on the Oracle Gen2 Cloud, which will be available round-the-clock every day, with the goal being to eliminate unplanned downtime in the medical environment.
Cerner has already migrated data platform HealtheIntent to the cloud, and the transition of device integration platform CareAware is underway.
“If pushing the cloud forward is what Oracle is banking on, they may face a rude awakening."
However, Oracle isn’t necessarily prepared to leverage the deal to expand its presence in the healthcare cloud sector. In fact, it could be that the deal will hinder the progress of existing Cerner customers onto the cloud, according to an analysis by Chilmark Research.
According to Chilmark, there are several issues that could hold back Oracle’s plans to build out an expanded cloud presence for Cerner.
One obstacle is the deal Cerner has with AWS to host HealtheIntent and CareAware. This deal is likely to include both contractual obligations and agreements with clients to support those solutions, and they won’t be able to unwind them overnight.
Also, although Cerner is built on Oracle’s database, migrating core Cerner product Millennium to the cloud will be a huge project that will take many years to complete. “If pushing the cloud forward is what Oracle is banking on, they may face a rude awakening,” said John Moore, CEO and founder of Chilmark. “They can get this done, but it’s going to take time.”
There are also many competing healthcare cloud offerings that have won trust in the marketplace. For example, last year Amazon rolled out AWS for Health, along with Amazon HealthLake, a tool designed to make it easier for healthcare organizations to search and analyze data.
Another major healthcare cloud contender is Google, which, as Moore sees it, has the best-in-class machine learning tools available, although he notes that it’s not clear whether the company plans to build out a healthcare-centric solution.
"A thirst for the cloud...being flexible, being able to move to a digital ecosystem, being able to scale to mass and the ability to integrate APIs and apps from the digital side."
In the meantime, other vendors are continuing to see growth in their cloud business. For example, MEDITECH has watched cloud uptake climb dramatically in the past several years, according to Christine Parent, associate vice president of marketing.
“We have seen a thirst for cloud technology,” Parent said. “That’s for a number of reasons, including being flexible, being able to move to a digital ecosystem, being able to scale to mass and the ability to integrate APIs and apps from the digital side."
According to Parent, MEDITECH’s cloud-based service – which is based on a Google public cloud environment – has seen approximately double year-over-year growth each year of its cloud offering. Last year, 70 percent of net new customers were going with MEDITECH’s cloud technology, including new customers who had never used its technology before.
There’s no reason to believe that this growth spurt won’t continue for the healthcare industry at large. In the past, health leaders were originally worried about cloud solutions being secure enough to meet their standards, that’s no longer the case, according to Moore.
“I believe that in their totality, cloud services are more secure than solutions being used on premise,” he said.
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