In this article, I am going to tell you my thoughts on Cerner, one of the largest healthcare IT companies in the US –the other big one being Epic.
So, let’s start from the beginning.
Cerner was founded in 1979 by Neil Patterson and 2 colleagues working at a big accounting firm –it no longer exists because was it involved in some shady consulting with Enron. Anyway, these guys ended up working together to build a piece of software called PathNet that would digitalize lab data (e.g., lipids levels, sodium ect). This was big at the time because all hospital notes were being hand written at the time.
In the 1980s, the company started expanding to more and more hospitals at a steady rate. And, in 1987 the company went public with an IPO that paved the way for exponential growth in the following years. As they attracted more clients hospitals, they began adding more software like RadNet or SurgiNet which as you can image, digitalized the data from different specialties.
In 1997, the company realized that creating disparate pieces of software for pathology, radiology, surgery, ect could be cumbersome so they decided to offer a unified ‘bundle’ package called Cerner Millenium. This adjustment was attributed with even more growth for the company in the coming years, reaching over 1.1 billion in annual revenues.
In 2015, the company –along with Accenture and Leidos– was awarded a 10 year 4.3 billion dollar contract by the government to manage electronic medical records for the Department of Defense. Part of the reasoning that allowed for this deal to go through Congress was the fact that Cerner had paid for RAND Corporation to do an assessment of the company in 2005 to predict how much money electronic medical records are saving the nation. The report estimated that Cerner and other EHRs were saving 81 billion dollars a year. Years later, RAND Corp came out with a statement saying that was a significant overestimate of the savings, but it was too late, the damage as already been done.
From 2015-2020, Cerner had continued to expand aggressively into other countries. Today, they actually have more EMR data worldwide than EPIC, even though EPIC has more patients in the US alone. At this time, the company was also facing a crisis of leadership involving scandalous emails, mass lay offs, and eventually the addition of 3 new C-suite executives. Then, in 2021, they hired a Pediatrician, Dr. David Feinberg, to be the CEO of the company –he was previously at Google Health.
Okay, now for the big moment! In 2022, Oracle acquired Cerner for 28.3 billion dollars. It isn’t clear what direction Oracle –the 3rd largest software company in the world– is going to take Cerner. But from the provider perspective, there is a lot of hope that they will improve the traditionally inefficient and cumbersome EMR system at client hospitals. I currently use Cerner to chart patient encounters and look up info on patients I am seeing on rotations everyday, so a big company like Oracle taking the reigns seems like a big plus. The new CEO is a medical doctor by profession so that is also a big plus. I listened to a podcast where he reiterated the common sentiment among providers that EMR systems have been inefficient and challenging to navigate for providers, and how the company in its new direction is seeking to address this. They are also focused on AI and cybersecurity, not a surprise.
That brings me to the conclusion of my article!
Here’s a bullet-point summary:
- Background and Founding: Cerner, a leading healthcare IT company in the US, was established in 1979 by Neil Patterson and two colleagues from a now-defunct accounting firm linked to Enron. They developed PathNet, an innovative software to digitize lab data, transitioning from handwritten hospital notes.
- Growth and Development: Throughout the 1980s, Cerner expanded its reach across many hospitals, going public in 1987 which catalyzed further growth. They developed additional software like RadNet and SurgiNet to digitize data across various medical specialties.
- Strategic Shift in 1997: Cerner introduced the Cerner Millennium, a bundled software package, addressing the complexity of managing disparate systems. This shift significantly boosted the company’s growth, pushing annual revenues over $1.1 billion.
- Significant Government Contract in 2015: In partnership with Accenture and Leidos, Cerner secured a $4.3 billion, 10-year contract to manage the Department of Defense’s electronic medical records. This was influenced by a RAND Corporation report commissioned by Cerner in 2005, which significantly overestimated the annual savings from EHRs at $81 billion.
- International Expansion and Leadership Changes (2015-2020): Cerner expanded globally, surpassing EPIC in international EMR data, despite EPIC leading in the US. Leadership challenges led to scandalous email leaks, mass layoffs, and the appointment of three new C-suite executives.
- New CEO and Oracle Acquisition (2021-2022): Dr. David Feinberg, formerly with Google Health, was appointed CEO. In 2022, Oracle acquired Cerner for $28.3 billion, sparking hopes for improved efficiency in EMR systems. Dr. Feinberg’s leadership is seen positively, focusing on making EMR systems more user-friendly and integrating AI and cybersecurity.
My friend Eric and I made a video of us talking about Cerner that goes more in depth:
