With acquisition, Oracle advances in healthcare

Sheila Zabeu -

June 07, 2022

More than five months after the deal was first announced, Oracle finally received all the necessary antitrust and regulatory approvals to complete the purchase of Cerner, including clearance from the European Commission. Cerner provides information systems to hospitals and other healthcare organizations to facilitate the delivery of better patient care. The deal was initially expected to be worth about $30 billion, the largest of any acquisition by the software giant. In the end, it was valued at approximately $28.3 billion, but retained its position as the largest acquisition.

A recent Mayo Clinic study pointed out by the companies showed that doctors spend one to two hours on medical records for every hour spent treating patients face-to-face.

“Working together, Cerner and Oracle can transform healthcare delivery by providing physicians with a new generation of information systems. Better information enables better treatment decisions, resulting in better patient outcomes. Our new easy-to-use systems are designed to reduce the administrative burden on physicians, ensuring patient privacy and reducing overall healthcare costs,” said Larry Ellison, chairman and chief technology officer at Oracle.

“Cerner has been leading the field in the digitization of medical care, and now it’s time to realize the true promise of that work with tools that get information to the right healthcare professionals at the right time. Teaming with Oracle provides an unprecedented opportunity to accelerate our work by modernizing electronic medical records, enhancing the healthcare professional experience, and enabling more connected, high-quality, and efficient patient care,” said David Feinberg, CEO and president of Cerner.

The prospect is that Oracle’s Autonomous Database, low-code APEX tools, and voice-enabled user interface will enable Cerner’s systems to be rapidly modernized and migrated to Oracle’s cloud. According to the company, this can be done very quickly because the main pieces of Cerner’s solution already use Oracle’s database. “It won’t be necessary to make any changes. What will change is the user interface. We will make Cerner’s systems much easier to learn and use by making voice technology the primary interface to Cerner’s clinical systems,” explains Mike Sicilia, Oracle’s executive vice president.

A Oracle espera concluir a oferta pública imediatamente após seu vencimento dessa oferta à meia-noite, horário do leste, em 6 de junho de 2022. O fechamento da transação está sujeito ao cumprimento de certas condições, incluindo relacionadas aos acionistas da Cerner.

What this transaction means for the healthcare industry

The $28.3 billion paid for the acquisition is almost three times as much as in what is now the second most expensive transaction, the purchase of PeopleSoft in 2005 for $10.3 billion. There must be a good reason for this considerable investment.

According to Oracle, Cerner’s solutions will be a major growth engine in the coming years as the company expands this new Cerner business to several other countries. Oracle already has a significant presence in healthcare, and with the acquisition of Cerner, it should expand it even further. Cerner was number 2 in the electronic medical records business, with 25% of the market in 2020, according to KLAS Research.

Moreover, the healthcare market is growing extensively in the post-pandemic era, attracting the eyes of other big players, not just Oracle. Microsoft, for example, paid $19.7 billion for Nuance Communications, a provider of voice recognition software used in hospitals, clinics, and doctors’ offices. “Microsoft has accelerated its efforts to deliver industry-specific cloud solutions. These efforts include Microsoft Cloud for Healthcare, launching in 2020, which aims to meet the comprehensive demands of the rapidly changing and growing healthcare industry. The Nuance acquisition announcement represents the latest step in our industry-specific cloud strategy,” Microsoft states on its website. Speech recognition and automatic transcription can significantly reduce the time doctors and other healthcare professionals spend typing patient information and treatment notes.

The company led by Elisson, on the other hand, with its union with Cerner, can make it easier to combine the data gathered by Cerner’s solution with Oracle’s analytical tools and artificial intelligence to identify patterns and make predictions about more effective treatments.

Oracle is also likely to be interested in Cerner’s cloud business because of its extensive relationship with Amazon Web Services and its Project Apollo initiative, built on top of the AWS infrastructure, which aims to deliver cognitive computing capabilities to healthcare customers.

“Oracle entered the cloud infrastructure business late and is behind AWS, Microsoft and Google in terms of market share. Far from admitting defeat, Ellison is using every opportunity to tout Oracle’s cloud capabilities and has every reason to believe that Oracle may be home to a good portion of Cerner’s future migration to the cloud,” highlights article on CNBC.