Cerner’s Shift To Cloud Cuts Costs, Improves Cybersecurity, Oracle Says

An article from

Dive Brief:

• Oracle has moved the majority of its Cerner customers to the cloud, which the company says will save money and improve data security, executives said on an earnings call Monday.
• The shift to the cloud will also enable Oracle to update products on a regular cadence, including a new suite of applications for ambulatory clinics that will start to ship in the fourth quarter, Chairman and Chief Technology Officer Larry Ellison said on the third quarter call. The system will feature an artificial intelligence clinical assistant. 
• Though the Cerner segment has been a “significant headwind” this year, CEO Safra Catz reiterated Oracle’s promise that the electronic health records vendor will return to growth next year. 

Dive Insight:

Oracle completed its more than $28 billion acquisition of Cerner in 2022, boosting the company’s offerings in the healthcare sector. 

But the health technology unit has faced challenges to its growth. The company has been moving customers from licensed purchases to cloud subscriptions, which means less revenue upfront and more cash coming in over time. 

In recent years, the unit has also lost market share to Epic, the nation’s largest EHR vendor, according to Klas Research. Though Cerner continues to win deals with small hospitals, losses at larger providers in 2022 caused the vendor to lose beds, the health IT research firm said. 

Total revenue for Oracle’s third-quarter 2024 earnings was $13.3 billion, an increase of 7% year over year including the Cerner unit, and up 9% without the segment, Catz said on the call with investors.

CTO Ellison said moving Cerner customers onto the cloud will cut costs. The ambulatory care suite will also include a clinical digital assistant that uses generative AI and can listen into doctor-patient conversations and create notes while automatically updating the EHR, Ellison added. 

Generative AI has become an increasingly popular topic in healthcare, with a number of tech firms launching their own products, many of which aim to cut down on clinicians’ administrative and documentation burden. 

The move to the cloud will also boost cybersecurity, Ellison said, which is a major challenge for the healthcare sector. The industry currently faces a high-profile attack on UnitedHealth’s Change Healthcare, which has rocked providers and pharmacies for nearly three weeks. 

“Those applications are much less vulnerable to ransomware or other kinds of attacks than if they were in a different kind of data center. So we’re very happy that these are now secure,” Ellison said. 

Oracle’s third quarter earnings come as the Cerner EHR was rolled out at a joint Department of Veterans Affairs and Department of Defense medical center last weekend. It’s the sixth VA site to go live with the new system after new deployments were put on hold last spring. 

The VA’s EHR modernization has been troubled, with patient safety and system reliability concerns plaguing the project. Cerner first won the contract in 2018.