Oracle eyes healthcare market in $39b deal for e-records vendor

NEW YORK • Oracle has agreed to pay US$28.3 billion (S$38.7 billion) for Cerner, a large electronic health records vendor.

The deal announced on Monday is the largest acquisition by Oracle, a database giant, and a sign that some major technology companies see healthcare as a growth opportunity.

For Cerner, the deal is not only a payday but also a merger with a deep-pocketed owner at a time of increasing competition and changing technology in the market for digital patient records.

Cerner is No. 2 in the electronic health record business, with 25 per cent of the market last year, according to Klas Research, which tracks the healthcare industry.

The digital patient record market, like most industries, is adopting cloud computing technology.

Both Microsoft and Oracle, analysts say, see the huge healthcare market as a path to strengthening their positions in the cloud business, in which customers tap remote data centres and typically pay on a pay-for-use basis.

Microsoft has the second-largest cloud business, behind Amazon.

In April, Microsoft agreed to pay US$19.7 billion for Nuance Communications, the leader in voice-recognition software used in hospitals, clinics and doctors' offices.

For Cerner, the deal is a striking step by its new chief executive David Feinberg. He joined Cerner from Google, where he headed its health technology unit.

His move to Cerner was announced in August, but he did not start in the job until October.

In a statement, Mr Feinberg said that merging with Oracle would give Cerner "an unprecedented opportunity to accelerate our work modernising electronic health records", improving the experience for physicians and nurses, and care for patients.

Electronic health records are regarded as a necessity to move medicine into the digital age - a shift that in the long run should increase efficiency, curb costs and deliver better care.

But the transition over more than a decade has been difficult, costly and time-consuming.

Most doctors and nurses now use digital records, but they spend an average of one to two hours doing desk work for every hour they take seeing patients, according to a study by Mayo Clinic that Oracle cited. Voice recognition and automated transcription have the potential to sharply reduce the time spent typing up patient information and physician notes.

In explaining the deal, Oracle executives pointed to its voice assistant technology, as well as its cloud, as assets that should help Cerner improve its offerings.

Buying Cerner gives Oracle a leading technology company in healthcare - a mammoth, if fragmented, market.

The merger also holds the potential to combine data that Cerner gathers in its digital records with Oracle's data analysis and artificial intelligence tools to spot patterns and make predictions about effective treatments.

In the digital patient record business, Cerner had another appeal for Oracle. Its records are built atop the Oracle database, unlike other large suppliers like Epic which run on a specialised medical database called Cache.

"Cerner really was the only logical match for Oracle," said IDC analyst Bob Parker.

NYTIMES