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Cerner to buy Siemens health IT business for $1.3B

The next round of health IT consolidation is on. Today, Cerner confirmed the rumor that had been swirling for a couple of weeks, that it will acquire Siemens Health Services, the health IT business of Siemens AG, for $1.3 billion in cash.

Cerner and Siemens also announced a strategic alliance to, according to the press release, ” jointly invest in innovative projects that integrate health IT with medical technologies for the purpose of enhancing workflows and improving clinical outcomes.” Each company will commit as much as $50 million to the alliance over the next three years, with an initial focus on integrating images and medical devices with EHR data in cardiology, Cerner says.

The device integration should come as no surprise. In healthcare, Siemens has always been, first and foremost, a medical device company. Health IT came later, by virtue of Siemens’ acquisition of Shared Medical Systems in 2000 for 2.1 billion. (Adjusting for inflation, that deal would cost $2.9 billion today, meaning that either Siemens overpaid in 2000 or the health IT assets lost more than half their value in the past 14 years.) Cerner has been selling medical devices for integration with its EHR products for several years, but nobody has confused Cerner for a device company. The two companies should complement each other well in this regard.

It’s no surprise that Siemens wanted out of the health IT business, either. Cerner and Epic have been dominating the enterprise EHR market in recent years, winning all kinds of replacement and upgrade business from health systems that previously had used Siemens, GE Healthcare, Meditech and Eclipsys technology.

Eclipsys, of course, merged with Allscripts in 2010, in a deal also worth $1.3 billion, and the combined company struggled to the point that the board forced out several top executives two years later. That was the last major acquisition in enterprise health IT until today. I don’t expect it to be the last, though I won’t predict anything other than that Epic will continue its strategy of growing organically and that many companies, particularly ambulatory vendors, will drop out rather than pursuing federal certification to the 2014 standards.

The market has been shaping up to be a battle between Cerner and Epic for a while, though the formation of the CommonWell Health Alliance a year and a half ago — now including Cerner, Allscripts, Athenahealth, Greenway Health, McKesson, Sunquest and CPSI — shows that Epic is everybody else’s No. 1 competitor.

Cerner and Siemens say the deal should close early next year.

 

August 5, 2014 I Written By

I'm a freelance healthcare journalist, specializing in health IT, mobile health, healthcare quality, hospital/physician practice management and healthcare finance.

Podcast: HIMSS CEO Steve Lieber previews HIMSS12

I’m about to head to the airport for my flight to Las Vegas and HIMSS12. As has become customary before each year’s HIMSS conference, I sat down with H. Stephen Lieber, CEO of HIMSS, this past week to discuss the state of health IT and what to expect at the big event.

The timing of this interview was interesting. We spoke Wednesday morning at the new HIMSS office in downtown Chicago, one day after CMS Administrator Marilyn Tavenner told a gathering of American Medical Association leaders that federal officials were re-examining the Oct. 1, 2013, deadline for adopting ICD-10 coding, and one day before HHS Secretary Kathleen Sebelius made it official that there would be a delay.

Also one day after this interview, HIMSS announced that it has taken over the mHealth Summit from the Foundation of the National Institutes of Health. While Lieber talked extensively about mobile healthcare, he gave no hint that this news was coming.

Meanwhile, the whole health IT universe had been expecting HHS to release its proposed rules for Stage 2 of “meaningful use” of electronic health records this past week. That didn’t happen. Monday is a federal holiday, so I don’t think we will hear anything until at least Tuesday, which, coincidentally, happens to be the first day of the HIMSS conference. As if we don’t have enough to keep us occupied in the next few days.

The recording is a little fuzzy. I’m not really sure what created the echo and the background noise, since we were in a dedicated interview room, one of the nice features at the new HIMSS digs. Radio interference perhaps? That happened to me a couple years ago in the old HIMSS office on East Ohio Street. Just pretend you’re listening on AM radio or something.

Podcast details: Interview with HIMSS CEO Steve Lieber, February 15, 2012. MP3, stereo, 128 kbps, 31.9 MB, running time 34:51.

1:00 Logistics of HIMSS12 in Las Vegas after the venue change
2:00 Why the Venetian-Palazzo-Sands might work better than the Las Vegas Convention Center
2:55 Why the conference starts on Tuesday this year
3:25 Massive scale of the conference
5:25 Return of Cerner and Meditech and some first-time exhibitors
7:45 mHIMSS and HIT X.0
10:15 Twitter co-founder Biz Stone keynoting and the state of social media in healthcare
12:00 Accountable care and realignment of incentives
14:15 What might be in proposed rule for Stage 2 of meaningful use
17:20 Preview of HIMSS survey of hospital readiness for meaningful use
20:30 ICD-10 readiness
25:00 Greater public awareness of health IT but continuing difficulties in communicating the finer points of healthcare reform
27:50 Mobile healthcare
31:25 The growing importance of clinical analytics

February 18, 2012 I Written By

I'm a freelance healthcare journalist, specializing in health IT, mobile health, healthcare quality, hospital/physician practice management and healthcare finance.

Meditech to skip HIMSS

I may be a week behind on this, but I just saw a Feb. 6 announcement that Medical Information Technology, better known as MEDITECH, has decided to pull out of April’s HIMSS conference.

According to the company:

Participating in the annual HIMSS conference has proven to be beneficial to MEDITECH and LSS through the years, as we have been able to renew acquaintances, attract new customers, and showcase new product offerings there. Nonetheless, the current economic climate mandates we pay particular attention to spending resources wisely this year. Just as we encourage customers to make HCIS selections based on value, we too must carefully evaluate our expenses and focus on priorities. For this reason, MEDITECH and LSS will not attend the HIMSS conference this year. Instead we will use communication channels such as our extensive program of regional events, annual workshops, Webex demonstrations, and meditech.com to share information. Using this approach, we will be able to continue sharing information on key topics, control our expenses, and minimize everyone’s costs.

Howard Messing
President and COO, MEDITECH

This comes just days after HIMSS itself touted record pre-registration for the annual conference, despite the terrible economy and the unpredictability of Chicago weather in early April.

This makes MEDITECH the second major vendor to pull out of HIMSS’09. It was widely reported around last year’s conference that Cerner would not have its usual mammoth booth in the HIMSS exhibit hall this time around. I’ve not heard of any reversal of this decision.

February 14, 2009 I Written By

I'm a freelance healthcare journalist, specializing in health IT, mobile health, healthcare quality, hospital/physician practice management and healthcare finance.