With more than 6,000 clients worldwide, Cerner is certainly one of the largest players on the healthcare IT landscape. In business since 1979, its founders — Neal Patterson, Cliff Illig and Paul Gorup — remarkably still call Cerner’s corporate corridors home. Earlier this year, the company threw the industry a curveball by announcing it would no longer exhibit at the HIMSS annual conference, making it clear the organization wouldn’t simply do things just because they had always been done. HCI Editor-in-Chief Anthony Guerra recently had a chance to chat with Cerner President Trace Devanny about where his company — and the industry at large — is headed.
AG: What can you tell me about your decision not to exhibit at HIMSS?
TD: As you know, we’ve engaged our clients in a pretty serious way, both in our own conference and at HIMSS in previous years. And in speaking with them, we’ve decided that we were not going to participate in HIMSS as an exhibitor in 2009. We will continue to engage HIMSS in areas ranging from core education to key industry topics, like interoperability of standards. We believe those are very important agenda. We will continue to work with HIMSS in other parts of the world and have a presence in some of the shows in perhaps Europe and Asia. As you know, we have a very big show of our own, and that continues to grow and it continues to be a very important part of our precious marketing spend. Our marketing dollars don’t go as far as we’d like them to go, but that’s the best use of those dollars at this point for us.
AG: A lot of people, when they talk about your company, talk about the personality of your CEO being a driving force. Can you tell me a little bit about that and the corporate culture that comes from that.
TD: First of all, Cerner was founded, as you may know, in 1979 by three gentlemen (Neal Patterson, Cliff Illig and Paul Gorup) and I’ll tell you, they are very proud of the fact that after 29 years, they’re still here. They show up each and every day, they’re very actively engaged and passionate, they’re enthusiastic, and I think that message is not only well known to all of our associates, but it’s contagious. When we wake up in the morning, we know every day that we have a chance to make a difference around the world in what we do, and I think we owe a large part of that enthusiasm and passion for our business to the founders. So, while Neal may be a bit of a controversial figure, someone might argue, I would certainly say he is the type of individual that not only provides great vision and great leadership, but he’s good for the business, he’s good for the industry, and over the years that has been proven to be true.
AG: Anything more specific about your corporate values?
TD: I think if I were to describe our culture, I think one of the first words that would come up would be entrepreneurial and the second would be visionary, and innovative. We are not afraid to innovate. We love healthcare as a marketplace; it’s the only business that we’re in, and information technology is core to that business. I would say that our culture is thriving, our culture is vibrant, and I think that we’ve attracted the best and the brightest people that are available in this industry. The average age of a Cerner associate is, I think I’m safe to say, 34 years old. We bring a lot of energy into this business and we’re very proud of what we’ve done and have a plan to continue to be a leader and a visionary and be entrepreneurial and innovative wherever it’s appropriate to further our business.
AG: You talk about being entrepreneurial and innovative; when you look at a new niche of the business or perhaps developing a new application or buying a company that offers an application you don’t currently offer your customers, what is the decision process? How do you decide whether to buy or build?
TD: We, as a company, are unique in a number of ways. Our founders being here after 29 years is very unique; our commitment to information technology only as our core business is a big unique point, if you look at the broad base of competitors. When you look our clinical culture, we were founded in a clinical laboratory, and if you look at the population today of Cerner associates around the world, we’re just under 8,000 associates. We have nearly 1,000, I don’t know the exact number, that are clinically trained. So we have a very strong belief that that type of culture does not happen overnight. That type of skill set is required to be successful and that’s the way that we’ve architected our company.
The second and last point that I would make is our commitment to R&D. We have a huge commitment, and have always had a huge commitment to funding these very important systems that support the complexity of healthcare. That will continue to be the case; Millennium today is a $1.4 billion investment, which is an absolutely incredible number, given the size and number of players in this business; that you could create something at that level. The good news is that we’ll spend another billion dollars between now and 2010 to continue to build out Millennium as our core business.
Back to your question of buy versus build. Any time we acquire a company, almost without exception, it is designed around Millennium architecture. As a rule, we don’t buy technology, we don’t buy companies for purposes of augmenting technology; we want to build our company organically. And I think if you look at our history, that’s the way we’ve always approached it. Have we bought companies for purposes that help move us faster into a market? Yes. Will we continue to take advantage of those opportunities where appropriate? The answer, of course, is yes. But as a rule, our strategy starts and ends with the fact that we are committed to our R&D spend and our spend will revolve around our core Millennium solution set and anything else beyond that will be ancillary to our core business.
AG: When you do acquire, do you truly integrate? We hear from many CIOs that complain about a lack of integration among different offerings from the same vendor.
TD: That’s the reason we’ve had such a keen interest in our Millennium investment and that’s why you don’t see Cerner spending a lot of money on external technologies, because it doesn’t actually fit into our core strategy. Millennium today, as I mentioned, is a $1.4 billion spend with 57 separate and distinct solutions, representing the largest, most comprehensive information technology platform from any provider in the world. So, anything we buy that’s ancillary to that is only just that. In most cases, there will be a plan to bring it into the Millennium architectural family, otherwise we wouldn’t buy it.
I completely agree with your point that many of our competitors are roll ups; many of them buy their way into the business. It’s a very slippery slope because in this age of delivering information to the right place at the right time to allow better decisions to be made for better outcomes, you can’t do that with roll up companies with separate technologies, different interoperability strategies and certainly different sets of standards. That’s why I think our advantages in the marketplace are fairly well known because we have an organic approach to that challenge.
AG: What are some of your product improvements on the horizon?
TD: We can answer that a number of ways and, as we mentioned earlier, we are a company that is constantly looking inward, as well as outward, to discover where our next opportunities may present themselves. So there are a number of areas where I think we will exploit our Millennium advantage, such as around standards and interoperability, around our CareAware architecture. I’m not sure if you’re familiar — when I say Careware, that is a standards-based approach of bringing together the convergence of information and medical technology to create normalized data, to allow that information to populate the medical records.
Consider a USB port, if you will, on your laptop, plug-and-play technology, the systems of the Black Hawks or the ability to recreate to our architecture, normalize that data, populate the medical records and make it available, as needed, to the caregivers at the point of service. That’s the direction where we are working very diligently towards, not only to improve care status, make the data available where it’s needed the most, at the point of service, but also to reduce costs and reduce inefficiencies. So that’s a big focus for us.
We’re also stepping into the medical device world and, basically, our first step is that we’re providing cabinets for Cerner PharmNet clients that will integrate the complex process on the floors of the various hospitals and clinics where they’re running PharmNet. So, it’s a medication dispensing devise that’s integrated with our PharmNet solution, and it really eliminates a lot of the workflow issues. It improves not only the quality of the care, but it also reduces those critical medical mistakes, those medical prescriptions that are wrong person, wrong time, wrong place.
Careware architecture is a really big part of what we’re thinking.
AG: How do you approach process improvement?
Part II coming soon
