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Healthcare CIOs react to Cerner’s Siemens acquisition

Author Name Kyle Murphy, PhD   |   Date August 8, 2014 

The message from Cerner Corporation following the definitive agreement to acquire Siemens Health Services has so far focused on the benefits of the merger for improving interoperability and advancing population health.

So what do those outside the Kansas City company make of the move? The answer to that question likely depends on whether an individual works in a Cerner shop or uses an EHR from the company’s biggest competitor Epic Systems or another vendor.
Several members of the Advisory Board at weighed in with their thoughts on the Cerner acquisition and the differences in opinion were clear.
For those in the first category (i.e., Cerner clients) the move is extremely promising, both for the prospects laid out by Cerner itself and the potential benefits in other health IT areas considering the expertise of Siemens beyond its EHR system.
In a blog post for Cerner, Mitzi Cardenas, Senior Vice President of Strategy, Business Development and Performance Integration and CIO of Truman Medical Centers, expressed her optimism about the possibility of greater integration between Cerner and Siemens:
Siemens is a world leader in diagnostics and imaging, and a company with a strong reputation for innovation. We’re a Siemens client on the imaging side, so I’ve seen that first hand. Cerner also has a strong history of innovation, constantly pushing the boundaries of what’s possible in health care. I think of advancements like new diagnostic tools and mobile platforms that can move health and care more fully into the home—that’s where we have to be to really move the meter on creating a healthier population.
The prospect of enhanced integration between imaging and the EHR is also an exciting possibility. Imaging is an integral part of how we care for patients today, from diagnostics to use as a communications tool between providers, patients and their families. Deeper integration between these two systems would be extremely valuable, enhancing the context of clinical information for our providers.
Meanwhile, comments from Greg Wolverton, FHIMSS, CIO at ARcare/KentuckyCare, and John Campbell, CHCIO, CIO at Spaulding Rehabilitation Network, draw attention to the potential for negative effects as a result of Cerner increasing in size and its implications for the rest of the health IT marketplace.
I believe we are going to see more mergers and acquisitions in the industry simple because of economies of scale and create more agility towards development.  Having said that, I also believe we will see more failures in the larger companies, due simply towards governance or the lack of being able to develop without the “red tape” timeline.
I chair the HIMSS Enterprise Information System Committee and we developed a mergers and acquisitions framework that focuses on the health delivery systems M&A.  A few of the working discussions included what I would call as “corporate collisions” — that is, companies that become so large post merger they seem to focus on the company rather than the client.  I could take examples from other industry mergers which the company and clients suffered as the two have attempted to spend more time in merging and developing new policy than with development, which ultimately left them behind the ball.
This move is clearly a response to Epic’s current domination of the EHR marketplace.   Siemens has struggled with the launch of its Sorian product and had some visible early failures especially with large-scale clients.   At the end of the day, this is a move to combine market share VS products or complementary capabilities — most likely to migrate Siemens customers to Cerner products.  
While Cerner states that the combined organization will allow them to more effectively go after interoperability and population health, neither of these areas is a particular strength of either company/product set today and are strengths of Epic; therefore, the marketing message is they will fill these gaps but they have a lot of catching up to do. 
In terms of trying to strengthen their competitive position with Epic, the need to support both legacy platforms while trying to migrate legacy customers to a single product set are gargantuan tasks and will further hinder their agility. Cerner in particular has not done a particularly effective job over time rationalizing their acquisitions into a compelling single platform.  The end result is a combined/strengthened 2nd-tier position in the EHR market, I don’t think this move impacts Epic’s lead position at all though it may have more impacts down market.

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