DIG This: The Complexity of Big Tech & Health Care Continues

Since Aaron Martin’s last blog, Health Systems, Health Care and Big Tech–It’s (Really) Complicated  Big Tech continues to make moves in health tech with the latest being the Oracle/Cerner deal just announced. We caught up with Aaron Martin, Providence Chief Digital Officer and Sara Vaezy who heads digital strategy at Providence to get their thoughts on the recent Oracle/Cerner announcement.

Aaron, there’s a lot of buzz in the industry about Oracle/Cerner—what’s top of mind for you?

Aaron: Just a few months ago, the head of Google Health leaves for Cerner, a traditional EMR vendor. The industry says big tech is ‘throwing in the towel on health care’… ‘it’s too hard’, etc. and then then sell Cerner to Oracle—the 6th (or so) largest cloud vendor only a few months later.

I’d say Big Tech is still very interested health care. The Oracle/Cerner transaction supports our thesis that Big Tech will continue to engage heavily in health care via different approaches.

Some, like Microsoft and now Oracle will be tech enablers to incumbents. They’ll gain deep industry expertise via acquisition as both Microsoft and Oracle have now done via Nuance and Cerner respectively.

I think this is just the beginning.

Sara, what’s your take on the Cerner/Oracle deal?  

Sara: I think it’s pushing health tech to be more just…tech. It’s similar to what’s happening to CRM, data, and other tech spaces in health care. We’re moving as an industry from bespoke “CRM for health care” like technology to adopting and modifying core technology that every other industry uses from the same group of large vendors. These large vendors are gaining deep expertise needed to deal with the complexity of health care workflows through acquisition and adding them to their technical depth, cloud platforms, and large sales channels. 

Aaron: Agree. I think it’s healthy for the industry to move to more standard cross-industry platforms. I talked about Microsoft’s move in buying Nuance in September’s blog post. I think there will be more acquisitions like this as big tech tries to establish its bona fides in health care.  

Sara: There will be. You’ll see more acquisitions of important technologies that enable digital transactions and patient engagement as Microsoft, Oracle, AWS, Salesforce, and probably Google look to enable health systems and payers. Also, Epic, Athena, and AllScripts will need close cloud partnerships at the very least. These companies all have deep technology teams, large cloud infrastructure, and large sales forces with platforms already well deployed into health care. They can also cross-subsidize their pricing to drive adoption of their enterprise health care ambitions or vice versa. This is going to drive faster pace of change and a re-platforming of healthcare’s technology infrastructure, causing adoption of modern platform infrastructure just as meaningful use did for EMR adoption in the first place, but much more rapidly. 

Any thoughts on what health systems should do in response? 

Aaron: Here’s the list from the blog in September. I wouldn’t change much…for our part at Providence, we’re just trying to go faster! 

  • Self-Disrupt Now. Identify where you must succeed and lead the disruption in the industry either alone or in partnership. This may mean setting up businesses that deliver a better customer experience and business model but may, at some level, compete with existing businesses you own. If you self-disrupt, you have a vote in the outcome. If you don’t, you’re at the disruptor’s mercy. At Providence, we’ve launched new disruptive businesses and spun out the technologies that we invented to power them so other health systems could make use of them as well.

  • Build Internal Capabilities and People. At Providence, we’ve managed to recruit leaders from major and up-and-coming tech companies to experiment, build and scale meaningful technologies. They’re also helpful in partnering effectively with both big and small tech. They can translate tech to health care and eventually vice-versa.

  • Invest and Partner. Where the health system is creating value in a relationship, invest in emerging companies to align incentives. We now have 26 portfolio companies in Providence Ventures’ portfolio. These companies we expect will generate a significant financial return upon exit but are delivering far more value via the new revenue streams, cost and quality improvements, they generate via close, aligned collaboration with our health system.

  • Industry Collaborations. There are many areas where Providence can’t do it alone and need the collaboration of other health systems. Examples include Providence’s partnerships with Truveta around data and CivicaRx around generic drugs.

  • First Mover Partnership. If a tech company is doing something disruptive in your industry, first determine if what they are doing will improve patient experience, cost, or quality. If so, try to think of ways to engage, partner or guide. There is big option value in negotiating early, favorable terms in a disruptive model.

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