The big news that had been rumored for a while was that Cerner was going to acquire the Siemens Health Services product line including Soarian. The rumor became reality as the acquisition was announced today. You can see the investor slide deck they published here. Most notably, Cerner has committed to supporting the Siemens Soarian product line for a decade:
Following the acquisition, support for Siemens Health Services core platforms will remain in place. Current implementations will continue, and Cerner plans to support and advance the Soarian platform for at least the next decade.
Of course, it’s one thing to suggest this in a press release. It’s another thing to actually do it in practice. However, it was smart of them to announce this approach to allay the fears of Soarian customers. If enough Soarian customers move over to Cerner, then you can be sure the announcement to sunset Soarian will happen. That’s a feature of EHR acquisition and consolidation. It’s just too expensive, especially in this regulatory environment, to maintain two code bases which perform the same functions.
These stats about the combined organizations are quite interesting:
- 20,000 associates in more than 30 countries
- 18,000 client facilities, including some of the largest health care organizations in their respective countries
- $4.5 billion of annual revenue
- $650 million of annual R&D investment
The last one is interesting given yesterday’s post on R&D companies. However, I think one of the key numbers there is the associates in 30 countries. Siemens Health Services has approximately 5,000 client facilities in over 40 countries including a strong presence in Germany, Sweden, Austria, Spain, Norway, and the Netherlands. You can be sure that a large part of this acquisition by Cerner is being able to go after the global market. There’s a huge opportunity in many countries that haven’t had billions of dollars falsely stimulating the market.
What I found particularly interesting on the investor call about the deal was Siemens efforts to take care of their existing customers. I’d describe it as finding a soft landing for their customers. You can understand why this is important. Many of those Soarian customers are still Siemens customers in other parts of the business like radiology. Siemens no doubt didn’t want to kill their other business by selling Siemens Health Services.
We’ll see what comes of the Siemens and Cerner $100 million innovation budget. If you look at the wording it says stuff like up to $100 million budget. Plus, these two companies are going to have to work together on some projects regardless. Cerner needs the data Siemens has and Siemens will need to get the data into Cerner. Will anything beyond that really occur, I’m not as optimistic.
I did find Neil Patterson’s comments on the post-Meaningful Use era interesting. I’d love to explore more of what he sees in that future. One person described it as a move from documenting the care given to a patient to technology that drives the care given a patient.
I’m not sure hospital execs should be that excited about this acquisition. It takes out another competitor from keeping EHR vendors honest. This really is getting down to a two horse race between Cerner and Epic and I think this acquisition will put Cerner just ahead of Epic in market share.
I liked this tweet from Hospital CIO Will Weider about the acquisition:
Siemens throws in the SMS towel. Bought for $2.1B in 2001, announces sale to Cerner today for $1.3B. Another big name fails in the HIT game.
— Will Weider (@CandidCIO) August 5, 2014