Biggest story of 2021 and we were on production break so I thought I would circle back and explore this blockbuster announcement.
in health, it. Oracle moves into healthcare in a big way. My name is bill Russell. I'm a former CIO for a 16 hospital system. And creator of this week and health, it has set of channels dedicated to keeping health, it staff, current and engaged. We want to thank our show sponsors who are investing in developing the next generation of health leaders.
Gordian dynamics, Quill tau site nuance and current health. Check them out at this week. health.com/today. I'm really excited about our sponsors for 2022. And I can't wait to share with you what each of them is doing. And how they can help you this year. As you know, on the today show, we normally take one new story, break it down and ask. So what, why does it matter and why should they care?
The Oracle move was one of the biggest moves in 2021. And we were off for production break when it happened. So I thought I'd circled back to this one, since it was such a big story. , the best article that was written on this is Michael Sade. S a D CIO for a Tennessee. , university out of Knoxville.
Medical center. And, , I'm going to share some of the things. From his article is titled seven thoughts. On the Oracle acquisition of Cerner and what it may mean for the healthcare industry. , this is on his, , blog CIO's reflections. It's also on health systems, cio.com. So here's, here's what he had is seven things. I think they're, they're really good. So number one, one of the most significant challenges, Cerner faces is its lack of robust revenue cycle solution that integrates with its clinical platform.
And he goes on to say, I firmly believe this single issue will determine Cerner's eventual success or failure with this acquisition. All right. So that's his number one point is that this makes sense because Oracle has a revenue cycle solution. If he, if they integrate this well with Cerner. They have a higher likelihood of success. His second point, Cerner has publicly stated that there are three to five-year plan is to move all their solutions to.
AWS cloud hosting and take advantage of more robust analytics. Cerner's healthy intent solution is already hosted on AWS plans are in motion to move the millennium platform to AWS. That's the EHR platform, and Cerner has been actively having discussions with their customers along these lines. And the press release by Oracle. And it's clear that Oracle intends to host the Cerner solution.
Within their Oracle gen two cloud, the migration would take years to fully complete and would require Cerner to move their healthy intent platform and abandoned the move to AWS. For the clinical platform, it will be interesting to see the roadmap for this change and understand the overall timing. Okay, this absolutely is going to happen by the way they, this is going to be one of the revenue streams that they are looking to accentuate. So if they're able to do additional services on top of the Cerner contract that already exists within the health system, which they would with the Oracle gen two cloud.
That is one of the ways that they're going to make the valuation of this deal make sense. So that is going to happen. He's right. Let's take a look at the roadmap as it comes out. Third thing with this acquisition, Oracle is now responsible for the VA and DOD Cerner rollout. And this is no small deal.
This is being done , in the public eye. We're hearing about it on Capitol hill, we're hearing, , Cerner's name, get drug through the mud on the rollout itself. This is a hard one, right? So, , there's, politics. There's government bureaucracy.
, the providers within the DOD and VA are not jumping up and down about changing. They're existing EHR platform. So this is going to be one to keep an eye on. Oracle does. Number four. Oracle is recognized as being the leader in the ERP space in part through the acquisition and subsequent improvements with PeopleSoft.
And he makes the point. The acquisition of Cerner creates an interesting value prop for healthcare organizations. Perhaps Oracle can find a way to bundle and more tightly integrate the ERP solution with the EHR system. Tighter integration between these two systems may allow Oracle to increase its ERP solution footprint.
It will be interesting to see what comes out of this future. Yeah. That's a big time play. I mean, clearly people aren't lining up to change their EHR or their ERP solution, but longterm, if there's enough points of integration and enough value that gets created through that integration.
They will have a value proposition for existing clients and potentially future clients. We'll have to see how this plays out. Number five, the healthcare industry is risk averse and does not like uncertainty. The point I made on my post about this on LinkedIn for existing. Cerner customers who were already considering a discussion with epic, for whatever reason, this news may be enough to prompt those organizations to reach out to epic. Now.
, they were going to anyway. So I agree with that. I would not be surprised if short term, this accelerates the pace of organizations moving from Cerner to epic. And he goes on to support that statement. , . It will be incumbent on Oracle to provide effective communication to existing Cerner customers and the entire industry. If the acquisition leads to further uncertainty in the future.
I look for epic to gain more clients. That's just, table stakes. If you're going to do an acquisition, your communication has to be spot on. With your clients with the industry and with the government contracts, it just it's going to play out in the public eye. So it has to be.
Really well thought out there as well. Number six, although companies frequently cite innovation as a benefit for mergers and acquisitions. My experience has been that this is not what happens at least initially. And he goes on to say at a time when innovation is critical to the future success of healthcare organizations, Oracle will need to find a way to remove the distractors and quickly promote innovation.
This will be a challenging task, given the size of both organizations and all the details that need to be worked out first. This creates a vacuum watch for other organizations to step up and fill the innovation void. That's absolutely going to happen. That's the opportunity and the market will always pounce on that opportunity.
And then his final point and the press release Oracle stated. Under the deal, Oracle will also make it's hands free voice assistant the primary interface to Cerner's clinical system. Allowing clinicians to make commands in the HR via voice, instead of typing on the computer keyboard, this is a great, uh, thing that you would throw in the press release, but he goes on to note, if the goal is truly hands-free experience, I do not see how this has accomplished without completely changing.
The Cerner EHR, it will be interesting to see where Oracle decides to take this in the future and how much the EHR. They will be able to claim. Is hands-free usage. And I think that's a valid point. It will require a significant rewrite in order for them to start navigating the EHR via voice. , and so we'll see where that goes. ,
as I said earlier, I like to end these stories with a, so what, why does it matter? And let me give you a couple of my thoughts. The potential of this acquisition is actually pretty good. But the complexity of this deal is incredibly high. The question is what are Oracle's intentions? I would imagine their intention is to establish a stronger foothold in the very lucrative healthcare software market.
Hold on to as much of the business as possible unlock value in existing assets, like data and points of integration, stabilize and grow the government business. If you saw a PowerPoint. To their board. It would say some of those points, probably a couple others. If I thought about it.
, my fear is that they will. Do this through price increases and creative packaging and unlocking the value of the data assets and selling those think patient data and hospital operations, they won't sell the patient data outright. Though, anonymize it and create value that way. Like we see happening with health systems right now through Truvada and other types of, models that are out there.
In addition, I think they will, , force my hand as a health system, CIO on a cloud strategy that benefits Oracle. Selling additional services to healthcare. , they have to feel pretty confident in retaining the government contract. A lot of these contracts have changed in ownership provisions, and I'd be surprised if this one doesn't give him that. I doubt they will make a move midstream, but.
, they're going to have to navigate that as well. Uh, by the way, this brings me to one of Epic's biggest advantages over an Oracle or a Cerner. Epic is not a publicly traded company. Therefore it doesn't have to post results on a quarterly basis. And this allows them to think and act more strategically.
They can act in a way without regard for the bottom line, at least for a season, they can do that. , this should not be underestimated. The, this acquisition will play out in the public light because it is a publicly traded company. And because of the government contracts. So what's the, so what I would say, wait, and see actions speak louder than press releases, as they say.
See if price increases are the first thing you experienced from Oracle and act accordingly. I suspect the cloud move and the price move will come pretty quickly. , you have to pay for these things, improve that your thesis for acquisition was correct. To your shareholders. , Oracle welcome to healthcare in a big way. And as I said, in my post, we can likely expect who knew healthcare was this hard to be uttered by an Oracle executive at some point during this year.
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