Sizing up the implications of Oracle acquiring Cerner

Among the areas of concern are integrating Oracle’s voice recognition with Cerner’s EHR and selecting a cloud platform.

Oracle’s purchase of Cerner could bring many benefits to both companies. But it also could create some formidable challenges.

One of the largest software companies in the world, Oracle is known for its database technology, cloud-engineered systems and much more. But it has limited experience in healthcare. Its purchase of Cerner, which provides an electronic health records system and many other healthcare technologies, gives Oracle an entry into this important market.

For Cerner, the takeover by the software giant will provide access to Oracle’s expertise in the management of accounting, billing and revenue cycles.

John Moore, Founder & Managing Partner, Chilmark Research

"Most [Cerner customers] will be hoping to avoid a complicated, disruptive cloud transition, especially in this already busy data management environment."

But while partnership has benefits for both companies, it also raises several critical concerns.

For example, will Oracle’s voice recognition software be a good fit with Cerner’s EHR? Will Cerner drop its ongoing shift to Amazon Web Services and rely, instead, on Oracle for cloud services? And how will the deal affect Cerner’s ongoing effort to push its own revenue cycle management system?

Voice recognition: A good fit?

In announcing the pending acquisition of Cerner, Oracle said its voice recognition software, Voice Digital Assistant, could be leveraged by the healthcare software firm to help reduce physicians’ recordkeeping burdens.

Each day, doctors spend an hour or more on electronic health records and/or desk work than they do on patient care, a recent Mayo Clinic study showed.  

The hassles physicians sometimes endure when dealing with EHRs contributes to burnout. Oracle believes its voice recognition technology can help ease the EHR burden because it’s easy to use, permitting access to information via a hands-free voice interface to secure cloud applications.

The advantages Oracle foresees, however, should not distract from an evolving problematic situation.

Oracle says the Voice Digital Assistant has a user interface that will permit rapid modernization of Cerner’s systems by moving them to Oracle’s Gen2 Cloud. This can be done quickly, because Cerner’s largest business and many of its clinical systems already run on Oracle databases.

But Cerner was in the middle of a migration to Amazon Web Services when the Oracle takeover plan was announced. As Ari Levi of CNBC asked, “Is that now going to stop, and is that now going to shift over to Oracle? And what does that mean for Cerner as an organization, and the amount of resources and bandwidth and everything else that they’re going to devote to that exercise, should that come to pass? And will that mean a loss of focus on their customers?”

Cerner’s customers who oversee clinical activities may not want to embrace healthcare dictation. They may ask: “Are EHRs a good fit for Oracle’s Voice Digital Assistant? Should everybody replace the keyboard and mouse input? Can voice effectively supersede the tabs, data entry cells and alerts that we have grown accustomed to?”

Meanwhile, Cerner already faces a formidable EHR challenge. The rollout of its EHR platform for the Department of Veterans Affairs and the Department of Defense has had its typical share of challenges because of politics and government bureaucracy. But the biggest challenge has been overcoming an apparent lack of buy-in for replacing a popular EHR platform already in use.

Because of the amount of resources dedicated to the VA and DoD rollout, some Cerner clients contend they are experiencing a drop in the company’s support services and product enhancement capabilities, says John Moore, Chilmark Research founder and managing partner. And those clients don’t expect to see any improvement in services and feature or function rollouts after the Oracle deal is done, he reports.

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Moore expects that many Cerner customers will adopt a wait-and-see attitude about the impact of Oracle’s acquisition. Most of them, he says, will be hoping to avoid a complicated, disruptive cloud transition, especially in this already busy data management environment.

Unanswered questions

Every transition is disruptive. The overriding challenge for Oracle and Cerner is how to make the necessary transitions as seamless as possible to facilitate data conversion without sacrificing continuity of patient care.

The adoption of new technology is often necessitated by the need to integrate disparate systems from once-separate organizations for whom routine tasks have become more time consuming and error prone.

The track record for mergers and acquisitions in all industries, including healthcare, is not reassuring. They often fall short of anticipated results, most frequently because of the lack of adequate due diligence, which might have provided a more realistic appreciation for the amount of effort required to achieve integration.

Consider this: Recently, the Cerner EHR platform went offline at the VA, DoD and Coast Guard for more than two hours with the failure of one of Oracle’s databases. During that time, more than 95,000 clinicians could not update medical information at 66 facilities at DoD, 109 at the Coast Guard and three at the VA, according to news reports. The blip forced clinicians to review patient data through a read-only system; they could update information only with pen and paper.

In light of the challenges following mergers, it’s critical that all those who will be using the services Oracle is bringing to Cerner customers start asking the right questions right away.

Cloud platform issues

It’s not yet clear which cloud platform – Oracle’s or Amazon’s – will turn out to be the best fit for Cerner’s EHR.

Among the questions Cerner’s clients must consider are:

  • Which of these platforms fits best with the organization’s vision?
  • If a switch to Oracle is, indeed, going to be made, how long will the learning curve be?
  • Which platform is most likely to improve business processes? Will either enhance operational efficiencies?
  • What costs are likely to be incurred?
  • How big a risk will there be in opting for a service from Oracle that has less experience in healthcare?
  • Does either platform have an edge in providing data security?

Revenue cycle management issues

Before the Oracle acquisition, Cerner had announced the launch of RevElate, an accounting tool aimed at reducing complexity for its provider customers by making data and workflow easier to manage. The new tool was introduced, in part, to eliminate persistent problems, such as poor code and broken products, in Cerner’s patient accounting product.

But how will the RevElate introduction be affected by Cerner’s acquisition by Oracle, a company already known for its revenue cycle experience and expertise?

Beyond the issues of cloud platform and revenue cycle management choices, other matters that must be addressed during the transition period include the following:

  • Functional overlap
  • Compliance risk
  • Operational challenges
  • Security threats
  • Business benefits

Cerner’s customer retention issues

For organizations that were already considering dropping Cerner products, will the pending Oracle takeover be the straw that breaks the camel’s back?

Will uncertainty from the acquisition compel some of Cerner’s to make a switch to Epic or another EHR provider? And for those who replace Cerner’s EHR, will strategies for maintaining continuity of care through the transition and legacy data management prove successful?

The ultimate impact of the blockbuster Oracle-Cerner deal is difficult to predict. But customers of both companies need to demand answers to critical questions and then make some tough decisions about what software products to retain or replace.

Justin Campbell is vice president of Galen Healthcare Solutions.

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