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What the Siemens Acquisition Means for Cerner - Cover

What the Siemens Acquisition Means for Cerner

I had heard rumblings for several weeks, but it still caught me by surprise—not so much the words “Cerner to Acquire Siemens Health Services for $1.3 Billion,” but more my thoughts about the ramifications of such a deal. I couldn’t help wondering what it would mean for the market and for Cerner. With the announcement so fresh, I have not had time to fully formulate my thoughts, but here are a few:

1. Cerner is now the top EMR vendor in terms of sheer numbers across the globe. 

In the U.S., Epic recently surpassed MEDITECH as the top EMR vendor in terms of contracted hospitals. Cerner was not far behind. Though Siemens has not made much of a splash with recent Soarian sales, they still have about 300 hospitals using either Soarian or a legacy Siemens platform.

With the acquisition, Cerner has supplanted Epic as the vendor with the most EMR customers in the U.S. with about 1,100 hospitals. Access our newly-published Clinical Market Share 2014 report. Globally, Siemens has had the largest EMR footprint.

Combine that base with the success Cerner has had with Millennium internationally, and Cerner now has the commanding lead in the global EMR market share split across multiple products, as demonstrated in our Global EMR Market Share report.

2. Cerner is facing an uphill battle.

I don’t want to sound all doom and gloomy, but history speaks for itself: There are a number of products and customer bases that have struggled immensely after going through acquisition. Take GE acquiring IDX (or BDM for pharmacy, Triple G ULTRA for lab, or Dynamic Imaging for PACS) or the Allscripts-Eclipsys merger, which has not yet lived up to the initial expectations around tying the product portfolios together.

Cerner will need to manage the transition for Siemens customers very well or risk estranging them. But Cerner is in a better position to succeed now than before, as customers have noted much more attentiveness recently.

3. Millennium absolutely must be Cerner’s go-forward solution.

Largely, the enterprise EMR vendors with the most energy and success in the market are those that have mostly built their enterprise solution from the ground up (Cerner, Epic, and MEDITECH in the U.S.) rather than trying to cobble pieces together. This is why I am skeptical about reports that Cerner will use Siemens’ financial system to repair a metaphorical chink in their armor.

After a number of conversations with customers using both Cerner and Soarian for financials, I’m not convinced one solution is hands-down better than the other, although some of Soarian’s struggles have been largely operational. In my mind, maintaining Soarian until customers can transition to Millennium would make more sense than trying to integrate Soarian pieces with Millennium or dealing with the logistical nightmare of developing both platforms into the future.

It makes more sense for Cerner to prod customers wanting to fill voids in Soarian’s portfolio (ambulatory, ED, surgery, etc.) toward a more comprehensive Millennium platform than for Cerner to try developing new Soarian solutions from the ground up. But customers have long been fans of Soarian technology. So if Cerner can find a way to leverage technology and make it available to the masses through Millennium, that could be a big win for the industry.

I would love to hear everyone’s thoughts on what I’ve said above or on the acquisition as a whole. Feel free to sound off in the comments below, email me at jonathan.christensen@klasresearch.com, or hit me up on Twitter (@JonatKLAS).

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