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Amazon on the Brink of EHR Deal with Cerner

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Amazon AMZN is on the brink of a major healthcare/machine learning deal with Cerner CERN, according to CNBC. This isn’t the first time that the company has partnered with the leading EHR provider. In the past, Cerner has used AWS for storage, computer networking and databases and for on-demand disaster recovery.

What’s Changed Now?

Cerner’s HealtheIntent platform facilitates the gathering and retrieval of and access to patient electronic records (EHRs) including prescriptions to facilitate their analysis by hospitals and healthcare professionals, thereby reducing the cost and improving upon the outcome of treatment while also taking care of insurance claims. Through Amazon’s AWS platform, Cerner intends to deliver these services along with Amazon’s advanced analytics at greater speeds to large healthcare organizations that operate on a bigger scale and across geographies.

Amazon Has The Capabilities


Healthcare professionals have been slow to move to the cloud because of security considerations and the regulatory pressure to maintain utmost secrecy of patient data. But cloud providers have also started recruiting experts in the field to better understand the requirement and create the capability.

In Amazon’s case, AWS has been built up to meet the requirements of the Health Insurance Portability and Accountability Act, or HIPAA. Earlier this year, it also created a secret team called 1492 to work on healthcare-related technology. The goal of the team is to build solutions that will facilitate interoperability between different EHR systems including the migration of data from one system to another to make data more accessible to both physicians and patients.

Cerner Has Significant Share Of Fragmented EHR Market

According to the KLAS US Hospital EMR Market Share 2017 report, the EHR market is dominated by a few large players. According to the report, Epic with its 25.8% share, Cerner with its 24.6% share and Meditech with its 16.6% share were the largest players in 2016. According to Kalorama, Cerner has the leading market share, followed by McKesson and then Epic with the rest of the market comprising GE Healthcare, athenahealth, Intersystems, QSI/NextGen, Meditech, Greenway, eClinicalWorks and 600 smaller players. CNBC quotes the 2017 Black Book Research report to say that Cerner and Epic together dominate the population health management software market.

Conclusion

While the fight for healthcare technology dollars is on and companies like Amazon, Microsoft MSFT, Alphabet GOOGL and Apple AAPL have targeted it in their own ways, EHR is a segment that Amazon appears to have taken a lead in. That’s not to say that the others won’t join in or catch up. But Amazon has an advantage because it has several offerings today, has a dedicated team leading the effort and access to customer healthcare data through medtech devices and non-prescription home tests it already sells. This could boost its healthcare-related machine learning to better serve customers.

Amazon currently has a Zacks Rank #3 (Hold) while Cerner has a Zacks Rank #4 (Sell). However, you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amazon shares are up 59.2% this year while Cerner shares are up 47.2%. Both have done remarkably well with respect to the S&P 500, which only appreciated 16.7%.

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