Where does that leave Oracle Health?
Oracle acquired Cerner in June 2022 for $28.4 billion. Since then, the combined Oracle/Cerner has faced a delay with its massive VA Department EHR project, renegotiated its contract with the VA at the agency’s request from a five-year deal to five one-year deals, and laid off employees in June. The uncertainty has rattled some nerves.
Cerner also had challenges before the acquisition, analysts say.
“With Oracle Health/Cerner, one of the big things that's been a complaint for customers for years and years has been around revenue cycle, where their customers have said, ‘It’s not working the way we need to, we're losing lots of money,’" said Tyson Blauer, KLAS's research director. “Epic has not had that issue.”
Oracle gained 22 customers in 2022, mostly comprising small, community-based hospitals. Because they were smaller hospitals, the company ended up losing 4,658 beds for the year.
What do Oracle Health’s financial results look like?
On an earnings call last week, Oracle CEO Safra Catz said Cerner was facing near-term headwinds as customers move from licensed purchases to cloud subscriptions. She said the company was working to drive Cerner’s profitability to Oracle’s standards.
After earnings were announced, Oracle’s stock fell 13%.
Despite the challenges, Oracle Health has loyal customers, Blauer said. Lennox-Miller said Oracle Health’s VA and Defense Department EHR installation project could help it gain international customers. In 2022, the company added customers in Canada, the United Kingdom, the United Arab Emirates and Germany.
Oracle Health did not respond to a request for comment.
What about other EHR vendors?
Other players in the space are Meditech, Computer Programs and Systems and Altera Digital Health, formerly known as Allscripts.
Meditech has 16.3% of the market of acute-care hospitals and 14% of acute-care beds, according to KLAS. Since 2017, the company has lost 670 beds.
Altera has lost 105 hospitals and 26,608 beds since 2017, according to KLAS. The company’s hospital business was sold to Constellation Software subsidiary Harris Healthcare for $670 million in March 2022. The hospital EHR part of the company rebranded itself Altera Digital Health in May 2022. The remaining part of Allscripts focuses on data analytics and renamed itself Veradigm in January.
CPSI's focus is community hospitals and has a market share of 8.2% of hospitals and 2.5% of acute-care beds, both of which have fallen since 2017. In the second quarter of 2023, CPSI posted a net loss for the first time in a while. In a call with analysts, CEO Chris Fowler said the company was facing economic headwinds but its EHR customer base had stabilized.
Meditech said KLAS’ market share data reflected consolidation among larger hospital systems. Altera and CPSI did not respond to a request for comment.
What about small practice EHR vendors?
There are several EHR companies that primarily serve clinicians outside the hospital. NextGen Healthcare and Athenahealth serve medical groups and physician practices.
Private equity firm Thoma Bravo acquired NextGen for $1.8 billion earlier this month while Bain Capital and Hellman & Friedman paid $17 billion for Athenahealth in February 2022.
Many of the smaller EHR companies lack the resources to compete with Epic. As such, private equity buyout could be the future for other smaller EHR companies, Lennox-Miller said.