Will Oracle’s acquisition of Cerner improve the VA EHR rollout?
While some observers say Oracle could help Cerner overcome challenges, others say the acquisition may have little impact.
Cerner has struggled with the ongoing implementation of its Millennium clinical applications at both Department of Veterans Affairs and Department of Defense facilities.
Oracle’s pending $28.3 billion acquisition of Cerner – slated to close this year – has prompted speculation on the potential impact of the acquisition on those projects.
Some observers predict Oracle could help Cerner improve its rollout to the government facilities, but others don’t expect the takeover to have much of an impact. And some former VA officials say that the agency’s project is destined to fail regardless of who owns Cerner because of change management problems within the agency that will negatively impact the project.
Roger Baker, former VA assistant secretary for information and technology and CIO:
“It’s hard to determine [at this point] if this is good or bad for the VA”
The VA’s rollout has been besieged with logistical issues, cost overruns and patient safety concerns. The VA paused the deployment of the Cerner system in July 2021, restarted the rollout in December with a shift of approach and then delayed it again in January, citing the COVID-19 surge in Ohio. The next rollout is slated at the VA Central Ohio Healthcare System soon.
Does Oracle bring stability?
Some observers contend that Oracle could help Cerner improve its performance on the massive VA project, which aims to replace its long-used VistA records system.
“Oracle brings a certain level of stability and knowledge of government contracting, and having that skill set should help Cerner with the contracts,” says John Moore, founder and managing partner of Chilmark Research, a healthcare IT research consultancy. “Oracle knows enterprise IT and what it takes to put in large enterprise systems.”
The Oracle acquisition of Cerner also could help the healthcare software vendor improve its overall service to clients, Moore says. “Cerner has spent an inordinate amount of time on the VA, and other [Cerner] clients are not getting the golden treatment they used to get,” he adds.
But others are doubtful Cerner’s new ownership will make much of a difference.
Ed Meagher, former VA deputy assistant secretary and deputy CIO:
"[The pending purchase] has nothing to do with the failure of Cerner at the VA. [The project is] already terminal”
“Things will be business as usual. I don’t see Oracle making a big change to the Cerner system,” says David Chou, a long-time CIO in the healthcare industry and founder of davidchou. health.
Similarly, Coray Tate, vice president of core solutions and interoperability at KLAS Research, notes: “Cerner and Oracle may also simply treat the VA and DOD the same as Cerner’s other customers. The VA and DOD are big, but they’re not unique.”
VA’s expectations
Asked to size up the impact of Oracle’s purchase of Cerner, a VA spokesperson told Health Data Management: “We do not anticipate the acquisition of Cerner to negatively impact VA’s electronic health record modernization process.” The spokesperson declined to offer further comment.
But one former VA official offers a different point of view.
Ed Meagher, who served for seven years as the VA’s deputy assistant secretary and deputy CIO, believes that Oracle will cut support to the VA contract and focus more on Cerner’s customers outside of the government. He also predicts that the acquisition will cause significant disruption of the VA rollout and could lead to the loss of some of Cerner’s best talent.
Another former VA official, however, says it’s too early to make any predictions on the impact of Oracle buying Cerner.
“It’s hard to determine [at this point] if this is good or bad for the VA,” says Roger Baker, who was the VA’s assistant secretary for information and technology and CIO from 2009 to 2013.
Could Oracle double down?
Tate of KLAS says Oracle’s ownership of Cerner potentially could have a big impact on the VA rollout if Oracle devotes more of its vast resources to the project.
“It’s not clear exactly what Oracle’s intentions are around this. Oracle brings to the table resources,” Tate says. So, if it doubles down here, it could bring more people and money for research and development [to the federal contracts]. That’s a real possibility. Or it could be the opposite and make [the contracts] as lucrative as possible [by not investing much into them] and ride [the contracts] out.”
Oracle could also decide it doesn’t want to be in the federal electronic health records business, Baker, the former VA CIO, notes.
“Part of the question is what are Oracle’s real business goals with the acquisition, and does it involve the government at all?” he says. “When Oracle did its due diligence, did it evaluate the VA business as a net asset or net liability? We don’t know the answer.”
Cerner has recently acknowledged that the federal contracts have been a challenge. The company disclosed in its Jan. 15, 2022, SEC Schedule 14D-9 Report that one of the problems in remaining an independent standalone company was the risk in the government contracting environment, including burdensome contracts, significant regulation and uncertainty related to the political climate and appropriations.
Challenges at the VA
The success of the VA project depends, in large part, on the VA’s management of the effort, says Chou.
“The [Millennium] EHR system has things that can be improved on. But it’s also about acceptance and change management. The VA does not accept Cerner, and [Oracle] doesn’t have the magic sauce,” Chou says.
Meagher, the former VA official, argues that the pending purchase of Cerner by Oracle “has nothing to do with the failure of Cerner at the VA. [The project is] already terminal,” he contends.
Baker, the VA’s former CIO, adds: “The main cause of issues is the VA, not Cerner. The next secretary of VA will end this program. It’s politically hard for the current secretary to do it and hard for the next one to say ‘why not?’ ”