What Oracle’s acquisition of Cerner could mean for big tech in health

Earlier this week enterprise software giant Oracle shocked the healthcare IT world when it announced its plans to buy one of the leading EHR systems Cerner for $28.3 billion. The news puts Oracle on the map as a potential major player in the health technology world. 

“This was a deal that no one saw coming. Beyond that, I would say it puts Oracle quietly in the healthcare tech space for the first time,” Paddy Padmanabhan, CEO of Damo Consulting, told HIMSSTV.

“Oracle has a presence through its ER pay products and its database offerings, and so on, but this is the first time they are getting into the clinical software space. And they are doing that with the biggest acquisition by far that they have done, but also the biggest acquisition of this year in tech, and in general one of the biggest acquisitions we’ve seen in the tech space in sometime.” 

It’s not the first time big tech has entered the healthcare arena. Over the last several years the FANNG companies have invested in the space. For example, Google developed an EHR search tool called Care Studios, Amazon began to offer virtual care services and Apple developed an FDA-cleared ECG algorithm for its Watch. 

“There is a new player in town, and that player has announced their presence in a very loud and compelling way. But let’s also not forget that big tech has had its own set of challenges in the last year.

“A couple of them actually took a step back, and the most obvious one is Google, where David Feinberg used to work before taking on the role of CEO at Cerner. And Google effectively shut down its healthcare business. There isn’t a healthcare business. Apple also had some setbacks in the primary care business they were launching,” Padmanabhan said. 

“Amazon is pressing forward. They seem to have consolidated all of their healthcare initiatives under one leader. They are getting directly into the primary care space, which is something that other tech firms have avoided. That is getting into the healthcare business, because selling healthcare technology and selling healthcare services are two entirely different things. Microsoft has had the most steady growth, if you look at all of these tech firms.” 

The news also brings to mind another major big tech acquisition of a healthcare company. 

“It has already happened and will continue. Microsoft’s acquisition of Nuance is one example,” Lee Shapiro, cofounder and managing partner at 7wireVentures, wrote in an email to MobiHealthNews.

“Electronic health records and billing systems are pervasive in the industry, so the next frontier will be on leveraging the data that comes from these systems to improve health. Oracle, with its experience in life sciences, is well situated to help drive some of these learnings. There are other big-tech players that have also made progress in healthcare that I expect will also be on the acquisition trail.”

There is also a question of this acquisition making Oracle a competitor to Nuance, a voice recognition and artificial intelligence technology. In the acquisition announcement, Larry Ellison, Oracle’s chief technology officer, brought up potential new capabilities in voice recognition. 

“With this acquisition, Oracle’s corporate mission expands to assume the responsibility to provide our overworked medical professionals with a new generation of easier-to-use digital tools that enable access to information via a hands-free voice interface to secure cloud applications,” Ellison said in the press release announcing the news.

“This new generation of medical information systems promises to lower the administrative workload burdening our medical professionals, improve patient privacy and outcomes, and lower overall healthcare costs.”

However, voice recognition isn’t something often associated with Oracle. 

“When we talk about voice recognition technology, Oracle is not the first name that comes to mind. There will be many questions that come up in the months to unfold,”  Padmanabhan said. 

There are still a lot of unknowns about what the acquisition will mean for the industry, but in the meantime the other major tech players will be watching. 

“Now they are going to have to contend with this really big player, and one that has quite a dominant position through just one single transaction,”  Padmanabhan said. “So it is going to put everyone on notice to say the least.”