Within the last several days, the news broke that Amazon Web Services would probably be doing some sort of far-reaching cloud deal with Cerner. Given that AWS is a nearly $20 billion cloud organization, and Cerner one of the largest health IT players in the game, a lot could happen here.
My guess, not that it’s any leap of imaginative genius, is that if the currently-rumored deal between the two partners works, Amazon will make a serious bid to buy out Cerner as a whole. Given the massive profits potentially at stake in health IT, the idea of such an acquisition seems credible to me, at least if Cerner’s stockholders approve. After all, isn’t Amazon the company that just did a multibillion-dollar buyout of Whole Foods to fuel its growing (but still relatively small-scale) efforts in food retailing?
Not only is this particular deal interesting, I think it may portend some major structural changes in the health IT business as a whole. Specifically, I think we’re reaching a point where there will be a lot of pressure on companies with adequate cash and compatible goals to target HIT organizations, particularly if they need to scale up quickly and don’t have much internal knowledge on the subject.
And there’s no question that as healthcare settles into being a digital business, a range of digital businesses outside of healthcare will see that as an opportunity to step into such an important market. After all, how could they not want to be part of any organization that’s competing effectively in an industry that consumes a double-digit portion of the US GDP?
Over this period, many small internal workgroups outside healthcare will be transformed into scouting units seeking the next big digital healthcare deal. At the same time, these divisions will start forming quiet alliances strategic to their business, not only with giants like Cerner and Epic but also well-positioned startups in hot areas such as, say, blockchain security or supply chain management. (How could an ERP vendor not wonder how a healthcare supply chain management company running over blockchain could enhance their business?)
Then, of course, there are the more obvious moves which will bring a new critical mass of health IT customers, knowledge and talent to companies with a giant market presence already, such as Apple and Samsung.
Such M&A efforts won’t be optional. As Microsoft’s experience has proven in the past, and Amazon has apparently found more recently, you can’t just storm into the enterprise healthcare world and demand your cut, no matter how big a player you are. Getting there will take a well-finessed, mutually-fruitful agreement, if not an acquisition, even for a mega-company like Google/Alphabet.
Now, can I tell you which companies will be executing on such deals next year? I have a few theories, but no specific intelligence to share that you couldn’t pick up on your own by skimming industry headlines. But I do stand by my prediction that by the end of 2018, we’ll have seen a few spectacular deals between HIT vendors and digital companies outside the industry that will have a major influence for years to come.