John Jellinek outlines the recent acquisition of Siemens Health IT division by Cerner

1. Cerner Acquires Siemens Health IT Business
Cerner, which provides electronic health records, is set to acquire the healthcare information
technology business off of Siemens at the tune of $1.3 billion.
The valuation comes from just over one times the sales of the Siemens
division.
Neal Patterson, the head of Cerner, is looking forward to what it can
provide to his already impressive company; “We think scale is important.
We were the largest IT company but this gets us a bigger, better
business platform. We’ll have a combined $650 million [in research and
development] to spend and we think the future of healthcare computing is driven around the
ability to innovate. This kind of preserves our ability to spend heavily in innovation and IT certainly
for the rest of this decade.” The importance of scale is undeniable as bigger companies have
lower costs per action through more numbers, it also allows them to think big, and act big in the
areas they feel are important, which in this case is innovation.
With the competition in the health IT industry being so stifling, this should give Cerner the ability
to continue to compete with industry rivals such as, Epic Systems, AthenaHealth, AllScripts,
NantHealth, and Flatiron Health.
While some would argue the strategy of acquisition on the basis that Cerner would have
captured business from Siemens organically
without the big buyout, Patterson defends the
deal; “Certainly we would have captured some
of this business over the next ten years. We
would not have captured all of it. We still see a
very good opportunity to grow that larger
number at double digits going forward after this
transaction.”
Pattern also outlined the fact that Cerner is
purchasing a business that is within their exact
expertise, there should not a prolonged integration period. He adds,” What we’re acquiring is
something we understand very well. There is from a financial point of view this is not heavy
lifting, this is a very good deal…”