Cerner world headquarters in North Kansas City, Missouri
|Traded as||NASDAQ: CERN
S&P 500 Component
|Headquarters||North Kansas City, Missouri, U.S.|
(Chairman and CEO)
|Products||Health informatics software|
|Revenue||US$ 3.402 billion (2014)|
|US$ 763 million (2014)|
|US$ 525 million (2014)|
|Total assets||US$ 4.531 billion (2014)|
|Total equity||US$ 3.566 billion (2014)|
Number of employees
|22,000 (End of 2014)|
Cerner Corporation is a supplier of health care information technology (HCIT) systems, services, devices and hardware. Cerner technologies optimize processes for health care organizations and are currently licensed by approximately 18,000 facilities around the world, including more than 3,000 hospitals, 4,900 physician practices, 60,000 physicians, 590 ambulatory facilities, 3,500 extended care facilities, 150 employer sites, and 1,790 retail pharmacies. As of February 2015, the company had more than 22,000 employees globally.
Cerner supplies a range of professional services, medical device integration, remote hosting and employer health and wellness services as well as value-added services, which include implementation and training, operational management services, healthcare data analysis, employer health centers, employee wellness programs and third-party administrator services for employer-based health plans. Individual consumers, single-doctor practices, hospitals, employers and national governments are among Cerner’s clients.
The company was no. 22 on Forbes' 2014 list of The World's Most Innovative Companies.
Cerner was founded in 1979 by Neal Patterson, Paul Gorup, and Cliff Illig, who were colleagues at Arthur Andersen. Its original name was PGI & Associates but was renamed Cerner in 1984 when it rolled out its first system, PathNet. It went public in 1986. Cerner's client base grew steadily in the late 1980s, reaching 70 sites in 1987, 120 sites in 1988, 170 sites in 1989, and reaching 250 sites in 1990. Installations were primarily of PathNet systems. Globally, 18,000 facilities license Cerner services and technologies.
During the 1980s and early 1990s, Cerner was developing components of a Health Network Architecture (HNA), an integrated IT system designed to automate health care processes. Clients could purchase individual components or the whole system at one time. By 1994, more than 30 clients had purchased the full HNA system, while 100 clients had purchased multiple components of the system.
Cerner began to expand globally in the 1990s as well, establishing presences in Australia, England, Canada, Singapore, Saudi Arabia and Germany during the decade.
In 1997, the company introduced Cerner Millennium, an upgrade to its HNA system that incorporated all of the company’s software offerings into one unified architecture. The introduction of Millennium contributed to significant growth for the company, with revenue increasing to $1.1 billion in 2005 from $245.1 million in 1997. Ten years after its introduction, in 2007, Millennium had been successfully implemented in more than 1,200 facilities worldwide. In 2014, Cerner announced revenues of $3.4 billion, up half a billion dollars from 2013.
In 2006, Cerner began offering programs to self-insure its employees and provide a primary care clinic with on-site staff doctors and nurses at its headquarters in North Kansas City, Missouri. The goal was to reduce costs associated with administering healthcare and increase employees' productivity by improving their overall health and the health of their families. In the late 2000s, other companies such as Intel, Michelin North America and Hewlett-Packard began taking a similar approach to care for their employees. Though many companies have struggled to get employees into wellness programs, Cerner’s program reached 96% employee participation by 2010. The program has helped Cerner keep annual insurance claims at about half the national average, and 70% of employees have either improved or held steady in risk areas such as BMI, glucose and cholesterol levels. In early 2010, Cerner acquired IMC Health Care, Inc. to continue expanding its wellness services with pharmacies, wellness programs and clinics marketed to outside companies. By the end of 2014, Cerner operated 35 health centers nationwide for such companies as Frito-Lay, AT&T and Cisco.
In September 2013, Zane Burke was named president, assuming the title from Neal Patterson.
Siemens Health Services acquisition
On August 5, 2014, Cerner announced its intent to purchase Siemens Health Services, the health information technology business of Germany’s Siemens AG, for $1.3 billion. Additionally, Cerner and Siemens AG plan to invest $50 million each into an alliance for research and development. The acquisition was completed on February 2, 2015.
CommonWell Health Alliance
In March 2013, Cerner, McKesson and several other competing health IT vendors announced an “unprecedented” collaboration to promote data exchange standards between their product systems. The stated goal of the new organization, the CommonWell Health Alliance, is to improve how patients and their medical records are identified and matched when their care needs cause them to travel between different types of facilities and care professionals. With a patient’s consent, Commonwell creates a unique identifier for each individual and allows health systems to locate, request and access a patient’s medical records when necessary for care. CommonWell began rolling out services to initial clients such as Columbia, South Carolina-based Palmetto Health in early 2014 and to health systems nationwide that November.
As of April 2, 2015, CommonWell had grown to 25 member organizations ranging from acute and ambulatory care EHR suppliers to laboratory, retail pharmacy, perinatal care, and long-term-care health IT systems, and more than 26,000 individuals had agreed to enroll in CommonWell’s network. CommonWell’s members serve more than 70% of acute-care facilities and 20% of ambulatory facilities.
In 2009, the University of Missouri (MU) expanded its existing technology development relationship with Cerner to create the Tiger Institute for Health Innovation. As part of the agreement, the MU Health Care System outsourced its health IT services to Cerner. The two organizations collaborated to develop new technology and methods of delivering health care based on federal regulations. The Always-on Flow Sheet, an example of joint development, was installed when the University Hospital was expanded in 2013. The Flow Sheet displays a patient’s vital signs for the past 30 hours on a flat-screen monitor above the patient’s bed so health care professionals have important patient information “the moment they walk into the room.”
The Tiger Institute partnership has been instrumental in MU Health Care’s increased University HealthSystem Consortium rankings since 2012, according to MU Health Care CEO & COO Mitch Wasden, EdD. In 2012, MU Health Care ranked 56 out of 141 academic medical centers, rising to 27th in 2013 and 9th in 2014.
In summer 2012, Nevada, Missouri announced it would partner with Cerner to design and implement a large-scale research and development project, “Healthy Nevada,” to improve the health of its citizens. The population in Nevada and surrounding Vernon County ranks in the bottom one-third of the state for health issues such as heart disease, juvenile diabetes, and obesity. The Healthy Nevada program has led to projects designed to encourage walking and bicycling by developing sidewalks and trails, as well as founding a community garden to encourage healthy eating. Vernon County has also become the first rural county to establish a mental health court.
Cerner is headquartered in Kansas City, Missouri. Cerner's world headquarters (WHQ) campus is across the street from North Kansas City Hospital, Cerner's second hospital client. In 2005, Cerner acquired the Riverport Campus complex on the site of what was formerly the Sam's Town Casino above the Missouri River in North Kansas City, Missouri In 2006 it also acquired the former Marion Laboratories complex in southeast Kansas City, Missouri, renaming the campus the Innovation Campus. In 2013, the company opened the first building in a new campus development located in Kansas City, Kan. The company calls this the Continuous Campus. In early 2014, the company announced that it had begun a $4.45 billion campus construction project on the site of the former Bannister Mall in south Kansas City near the Innovation Campus.
Cerner maintains a handful of additional offices in the United States, as well as offices in the UK, Australia, UAE, Saudi Arabia, Egypt, Germany, France, and several other countries.
In 2013, Cerner announced plans to redevelop 236-acres in south Kansas City, Missouri into an office park. The site was previously occupied by Bannister Mall, which was demolished in 2009. Cerner broke ground on the new campus on November 11, 2014. The $4.45 billion project intends to employ 16,000 new Cerner workers within the decade.
In 2005, Cerner and other companies paid for a report by the RAND Corporation which predicted great efficiencies from electronic health records, including savings of $81 billion a year or more, which RAND now says is overstated. This report helped drive growth in the electronic health record and billions of dollars in federal incentives to hospitals and doctors. Cerner's revenue has tripled from $1 billion in 2005 to a projected $3 billion in 2013. The study was criticized by the Congressional Budget Office for overstating potential savings. A 2013 reassessment of the 2005 report by the RAND Corporation said that the conversion had failed to produce savings and had mixed results in efficiency and patient care.
In 2010 Girard Medical Center, Crawford County, Kansas, hired Cerner to install an electronic records system. But after receiving $1.3 million, Cerner employees failed to get the system running in time to qualify for federal incentive payments, and notified the hospital that it was abandoning the project, according to a lawsuit Girard filed against Cerner last year. The case is in arbitration.
Phillip Longman, a senior fellow at the New America Foundation, said that the installation of a computerized health system by Cerner in the Children's Hospital of Pittsburgh of UPMC in 2002 made it harder for the doctors and nurses to do their jobs in emergency situations and resulted in a "disaster". Longman wrote, "According to a study conducted by the hospital and published in the journal Pediatrics, mortality rates for one vulnerable patient population—those brought by emergency transport from other facilities—more than doubled, from 2.8 percent before the installation to almost 6.6 percent afterward."
Defenders of Cerner in the study charged that the Pittsburgh hospital did not adequately prepare for the transition to the CPOE system in that it had at the same time significantly changed its pharmacy process, did not provide adequate wireless bandwidth, and did not have order sets pre-programmed on day one. They noted that other hospitals that more carefully planned the implementation did not experience the same problems.
In 2001, a memo authored by CEO Neal Patterson and sent to about 400 managers was leaked online. The memo, written in harsh language, was meant to motivate the managers to get more productivity out of employees and promised layoffs, a hiring freeze, closing of an "Associate Center", and the implementation of a punch-card system if Patterson did not see evidence of changes. Patterson's metric was the fullness of the company's Kansas City office lot at the hours of 8 a.m. and 5 p.m. The memo was widely seen as inflammatory and poor management, and Cerner's stock price fell 22% over three days.
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