Oracle’s gargantuan $28.3 billion acquisition of health care data company Cerner, the largest deal in its 44-year history, is not just about electronic patient records. It’s about the evolution of health care tech and AI.
From algorithmic systems that predict the likelihood a patient will contract sepsis to tech that tracks hospital bed capacity, Cerner will bring an array of cloud-based data analytics and AI technologies to Oracle as it competes with Amazon Web Services, Google, IBM and others to serve the health care industry’s data and AI needs. In fact, the deal is poised to shift some business away from AWS, which Cerner named as its preferred cloud partner in 2019.
Oracle’s acquisition of Cerner, a company that got its start in health care IT in 1979, is expected to close in 2022. The all-cash deal is also expected to improve Oracle’s bottom line in its first year, the company said in a press release.
Bringing Cerner into the fold will give Oracle several new data-centric health tech platforms. Cerner offers an electronic health care records data and insights system, platforms for tracking emergency departments, hospital bed management and surgical departments, as well as nursing workflow tools and a command-center style platform that can be used to view the data associated with all those other applications.
Cerner already helps customers build applications around the health records data flowing through its systems. Like other health care records technology providers, Cerner offers an API for pushing granular data from electronic health records into applications for things like AI and 3D imaging for wound care, calculating risk of diabetes or analyzing family medical history to determine risk of disease.
"Moving forward, I think Cerner will look more like a health platform company and less like an EHR company,” said Dan Devers, then Cerner’s SVP of cloud strategy.
Like Google, AWS, Microsoft and other cloud and data services providers, Oracle has built products for the health care industry for years. The company introduced its Health Sciences Cloud services in 2011 and still pitches its analytics cloud, cloud-based machine-learning tools, data integration, predictive analytics tools and IoT-based patient monitoring tech for health care customers. In its Q2 fiscal 2022 earnings call, Oracle emphasized health care among its top strategic priorities, naming recent client wins including Mayo Clinic and Syneos Health.
Billions will be spent in health care analytics and AI in the next few years. According to analyst company MarketsandMarkets, health care AI will attract $67.4 billion in 2027, up from just under $7 billion this year. Technavio reported that the health care analytics market will grow by around $37 billion between 2022 and 2026. The company mentioned Cerner, Oracle, IBM and others in its report.
Disrupting Cerner’s AWS partnership
Cerner will bring Oracle longtime relationships with hospital and health care industry clients along with massive government customers. The Department of Veterans Affairs and Department of Defense use Cerner’s electronic health care record technology, for example. Cerner also has worked with University of Missouri Health Care to develop an algorithmic system for scoring a patient’s risk of contracting sepsis based on vital signs. Lafayette General Medical Center uses Cerner’s hospital bed management and patient tracking system.
Now, Oracle wants Cerner to help it expand use of its AI resources, including its voice-enabled interfaces; those could be integrated with Cerner’s existing tech. But in a press release about the acquisition, Oracle also indicated it wants to be Cerner’s go-to provider of cloud and data infrastructure.
“Cerner systems running on the Oracle Gen2 Cloud will be available 24 by 7 by 365. [The] goal is to deliver zero unplanned downtime in the medical environment,” the company said. Oracle also indicated Cerner systems will run on Oracle’s database, ensuring that “only specifically authorized medical professionals can access patient data” while “IT professionals running the systems are unable to look at patient data.”
Oracle’s goals with the Cerner deal could rattle Cerner’s cozy relationship with AWS. Cerner announced a collaboration with AWS in 2019, expanding its use of its cloud services as well as its related machine-learning tools. That year, Cerner’s former CEO and chairman Brent Shafer spoke at Amazon’s popular cloud conference, re:Invent, touting Cerner’s new cloud-based platform, code-named “Project Apollo.”
In addition to migrating its health technologies to AWS, Cerner said it had already been using Amazon’s ML Solutions Lab along with its SageMaker platform for querying anonymized patient data to build machine-learning algorithms for purposes such as early detection of congestive heart failure. Cerner also said it had used Amazon’s voice recognition and natural-language processing technologies and ingested and transformed patient data from diverse sources for machine learning using Amazon’s centralized HealthLake data lake.
It remains unclear what will come of Cerner’s tie-up with AWS going forward. An Oracle spokesperson declined to comment for this story, and Cerner did not respond to a request for comment.
However, Oracle’s acquisition of Cerner might not entirely upend its relationship with AWS. In the data, cloud and AI tech world in recent years, there has been a move toward openness rather than exclusive partnerships, even if they create competition or an overlap in services, said Paige Bartley, senior research analyst for the data, AI and analytics channel at 451 Research, a part of S&P Global Market Intelligence.
“There has been market pressure for tech providers to be more accommodating with their partnerships,” she said. “Even when that could imply partnering with potential competition, we see that across not only AI but across data management, across the data layer."
Bartley also pointed to the importance of data-management controls for privacy and AI model transparency in the cloud ecosystem.
A Trump-era data incentive
Oracle also is among the largest data brokers, selling data through its Data Marketplace, and it remains to be seen what levels of access to patient data flowing through Cerner’s systems Oracle will have.
That has people like Pam Dixon worried. The executive director of World Privacy Forum, an organization that has focused much of its research on health care data privacy and policy, said her primary concern is whether the deal with Cerner will give Oracle access to patient data — whether it’s identifiable or de-identified.
While there would be nothing illegal about Oracle attaining de-identified patient health records data, she said, research has shown it can be re-identified. “The question is, are there any contractual provisions that will stop Oracle from re-identifying any HIPAA-covered de-identified data,” she said, referring to the health care regulations that restrict use of patient data.
Dixon also pointed to a possible incentive for Oracle in its desire to buy Cerner. Health care data-related waivers established by the Department of Health and Human Services during the Trump administration in the fight against COVID-19 allow business associates — i.e., companies like Cerner — to use health care records without the permission of hospitals, doctors’ offices or other entities covered under HIPAA rules. “The HIPAA business associate waiver is problematic right now, and it is a consideration,” said Dixon. “So many of these records could be used for AI analysis, but there are ethical lines here.”
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