Oracle's Acquisition of Cerner Faces Major Challenges

Larry Ellison’s Vision for the Future of Medicine

by Faruk Imamovic
Oracle's Acquisition of Cerner Faces Major Challenges
© Getty Images/Justin Sullivan

Larry Ellison's vision for revolutionizing medicine crystallized in a doctor's office when he needed medication to manage his cholesterol. His doctor prescribed a statin called Crestor based on general factors like age, and family history. However, Ellison realized this was just an informed guess. This moment sparked his idea: what if generative AI could analyze a patient’s records alongside millions of others to better detect disease and guide treatment?

At Oracle's CloudWorld conference, Ellison emphasized integrating medical data into Oracle's AI models to revolutionize Electronic Health Records (EHR). This vision led to Oracle’s $28.3 billion acquisition of Cerner in 2021, which managed EHRs for a quarter of American hospitals, including those run by the Pentagon and the VA. Ellison aimed to use Cerner’s data to create a futuristic EHR system to improve patient outcomes and reduce costs.

Cerner’s Rocky Path to Oracle’s Fold

However, Cerner’s integration was fraught with issues. Its system rollout at the VA, serving 9 million veterans, had been disastrous. Over 11,000 medical orders disappeared into an "unknown queue," causing patients to miss essential treatments. These failures harmed 149 patients and contributed to three deaths. The futuristic healthcare system Ellison envisioned seemed distant as Oracle had to fix Cerner’s dysfunctional system to prevent more harm to veterans.

Ellison first approached Cerner two decades ago during a boom in health tech. Despite the optimistic outlook of digitizing medical records, Neal Patterson, Cerner's co-founder, was skeptical of Big Tech's role in healthcare and rebuffed Ellison’s advances. Years later, Cerner won significant government contracts for EHR systems at the Defense Department and the VA. However, the passing of Patterson in 2017 and subsequent internal struggles left Cerner vulnerable.

A Struggle for Stability and Functionality

By the time Oracle acquired Cerner, the latter was overwhelmed by its government contracts. The VA’s switch to Cerner’s system caused doctors and nurses to spend excessive time inputting data, compromising patient care. Missing orders and a complex system led to significant patient care issues, exemplified by a homeless patient at risk of suicide whose care order disappeared, resulting in a hospitalization after the system failure.

Oracle underestimated Cerner's challenges. The company realized the magnitude of these issues after acquiring Cerner, with outages and systemic failures continuing. Oracle executives assured lawmakers of their commitment to fix the problems, promising a cloud transition and system improvements.

Despite Oracle’s efforts, including installing new hardware and involving top engineers, issues persisted. Notably, a design error in the scheduling system led to inadequate follow-ups for mental health appointments, contributing to the death of a veteran from substance use relapse. Another veteran died due to a pharmacy error where a needed medication was never delivered.

Larry Ellison
Larry Ellison© Getty Images/Justin Sullivan

Ellison’s Health Aspirations Meet Harsh Reality

Ellison remained determined to revolutionize EHRs, but the VA contract proved a significant burden, diverting resources from his broader vision. Oracle's health team morale suffered amid these struggles. Lawmakers and stakeholders called for scrapping the VA contract due to ongoing issues, emphasizing the complexities of adapting a vast government system to a standard EHR designed for private sector needs.

Ellison viewed healthcare as a backward business. Dr. David Agus, a renowned oncologist who treated Ellison’s nephew and collaborated on healthcare investments, noted Ellison's commitment to solving healthcare problems. "Larry actually solves the problem, not just gives money," Agus said. However, the Cerner acquisition presented challenges beyond Ellison's control.

Oracle’s Continued Struggles and Future Prospects

Nearly two years after the Cerner acquisition, Oracle claimed it made thousands of improvements. "Our veterans and the people who care for them deserve a world-class EHR system," Seema Verma, head of Oracle Health and Life Sciences, stated. However, the system’s rollout remained paused, and the VA imposed higher penalties on Oracle for unmet performance targets.

Despite promises to stabilize Cerner’s system, Oracle struggled. The company hadn’t fully moved Cerner onto the cloud, and outages persisted. For example, a system failure in April forced VA staff to revert to manual notes. Further complicating matters, Cerner continued losing clients to competitors like Epic, affecting Oracle’s potential to leverage Cerner’s data for advanced AI models.

The Human Toll

The Charlies, two veterans advocating for better care in Spokane, highlighted these failures. Their personal experiences with Cerner’s flawed system galvanized their efforts to push for a resolution. Despite Ellison’s grand ambitions, the immediate priority for the Charlies and other advocates was ensuring veterans received the care they deserved without further harm from systemic failures.

Larry Ellison’s vision for integrating AI with EHRs aimed to transform healthcare. However, the practical challenges of managing and fixing Cerner’s flawed systems have been significant. Oracle's acquisition of Cerner brought to light deep-rooted issues that continue to impact veteran care, prompting calls for a reassessment of the VA’s contract and a focus on delivering reliable and effective healthcare solutions.