Cerner Execs Say They’re Jettisoning ‘Side Pursuits’

Oct. 31, 2021
The EHR giant’s new CEO says it tried to do too many things in the past.

David Feinberg, M.D., CEO of the Kansas City-based Cerner Corporation, on Oct. 29 said his brief to his teammates is simple: It’s time to be disciplined and focused so that the company can build in a big way on the beginnings of its turnaround.

Asked on a conference call discussing Cerner’s third-quarter results about his biggest takeaway from working at Google – where he was vice president of Google Health for nearly three years – Feinberg (who before that ran Geisinger and UCLA Health) didn’t hesitate.

“The user is super important,” he said. “I think EHRs have been built as billing machines. I think they’ve been built as lab machines. And nobody has built an EHR for a nurse in the ER. No one has built an EHR for a busy ambulatory care physician. No one has built an EHR that said, ‘Our goal is to make it easy for this interventional cardiologist or that population health manager nurse.’

“What I learned at Google, while I was surrounded by some of the smartest engineers and product people, but the UX team was why I think Google and some of these other tech companies have been so successful in getting products that have billions of users.”

To sharpen that focus on end users, Feinberg and CFO Mark Erceg said they are jettisoning various ‘side pursuits’ at Cerner and – while maintaining their roughly $800 million annual research and development budget – narrow the scope of such work to improving the usability and reliability of Cerner’s core EHR product while better integrating billing.

“It’s going to be somewhat revolutionary around here,” Erceg said of that push.

Another key to the planned turnaround – and to reaching Cerner’s goal of operating margins in the mid-20s by 2024 – are cost cuts. The company, which in the third quarter booked a net profit of $176 million on sales of nearly $1.5 billion, will save tens of millions of dollars annually from having shed 1,000 workers since early summer and selling several of its buildings. The company is cutting another 150 jobs in the coming weeks and putting on the market two other properties that Erceg said should save another $20 million annually. On top of that, Erceg added, a review showed that the company uses a whopping 750 unique types of third-party software that cost about $330 million per year; that spending will also be reined in in the near future.

When Dr. Feinberg’s appointment as Cerner CEO was made in August 2019, the company noted that “Dr. Feinberg, 59, has served in numerous senior leadership roles during his more than 25-year career in healthcare, and joins Cerner from Google. Since 2019, Dr. Feinberg was the Vice President of Google Health, where he led Google’s worldwide health efforts…. Prior to Google,” the announcement noted, “he served as President and CEO of Geisinger Health—a physician-led health system, and one of the nation’s most innovative health services organizations. At Geisinger, Dr. Feinberg led an operational turnaround, and pushed the use of new platforms and tools, including an IT system called a Unified Data Architecture that allowed the company to integrate big data into existing data analytics and management systems.” And prior to that, he had been president and CEO for the UCLA Hospital System.

Shares of Cerner (Ticker: CERN) were up nearly 4 percent to more than $73 on the heels of the Q3 report. They are down slightly over the past six months.

 
See also: ‘At the Nashville Summit, Experts ID EHR Success Factors’ from last month

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