For some former Cerner Corp. execs, the health IT company’s proposed $28.3 billion sale to Oracle Corp.brings a twinge of sadness.
“It represents a bit of an end of an era,” said Zane Burke, a former Cerner Corp. president who’s now CEO of Quantum Health. “Cerner has long represented innovation and growth in Kansas City and in health care around the world. … I think culturally and otherwise, those will be big challenges for Oracle to keep that innovative spirit that once existed at Cerner and take full advantage of that.”
But despite the loss of an area icon, Burke and three other area executives also see that the proposed all-cash deal could deliver substantial benefits to Kansas City's tech scene, too.
Attracting — and keeping — talent
Through the years, Cerner has built a rich pipeline of leaders and tech talent, many of whom have launched other tech startups or have gone on to lead other health care and tech companies in the Kansas City market and beyond.
“I don’t know that (Perceptive Software Inc.) would have been successful if Cerner hadn’t existed before us,” Perceptive co-founderScott Coonssaid. “Cerner helped generate and attract software talent to the greater Kansas City area. … Your intellectual property is your asset, and that comes from your people. You have a pool of great people, and Cerner helped drive that. We owe a lot of our success — and every software company in Kansas City owes Cerner for that success.”
Burke pointed to several former Cerner leaders who now are executives at companies such as WellSky, Netsmart and Allscripts.
“It’s a fascinating dynamic,” he said. “Cerner has been a feeder for many companies in terms of talent.”
But Burke worries that could wane moving forward. Oracle could look elsewhere to fill tech roles — including its new headquarters in Austin — and it will be tough to replicate Cerner’s knack for developing and recruiting talent, he said.
“I’m concerned about what it means for Kansas City’s tech scene,” Burke said. “I think it’s time for the community to really think about who the next Cerner is going to be. So it’s really important that we invest in those businesses and do the right things from a support perspective to make sure that the next Cerner is generated because it’s clearly been of benefit for Kansas City and the tech scene.”
Seeing the upside
Netsmart CEOMike Valentine, a former Cerner COO, said that learning about the deal was surreal. Oracle previously pitched an acquisition around 2008, but at the time, Cerner’s executive team didn’t think the combination would accelerate or improve its strategies.
“Having spent 13-plus years at Cerner, whenever something like this happens, the immediate reaction of folks like me is sadness on one front that something that had a unique identity is going to fundamentally change," he said. "But there’s hope and optimism that it can come together in a way that will be good for Cerner, good for Kansas City and good for the people who are both working there now and that benefit from it.”
Valentine said he’s optimistic that joining Oracle will spur new innovations that will benefit the health care industry and Kansas City.
“I think everyone’s design in the transaction is to find ways to put Cerner back on a growth trajectory that it saw 20 years ago. … The last thing we need is a company the size of Cerner not in a position of strength,” Valentine said.
An influx in cash from Cerner stock buyouts could spur current employees or other shareholders to become new investors in area startups or launch one themselves, Coon and Valentine said.
A bullish take
KC Tech Council CEO Ryan Weber said he’s bullish on the proposed deal. Even if it resulted in a worst-case scenario of large numbers of engineer layoffs, the Kansas City market can handle it, he said. The metro has 4,400 tech employers, and 1,000 of those are trying to fill 6,000 open tech jobs.
“I think Kansas City is an undiscovered region of great software talent, and now it’s going to be exposed to Oracle in a new way,” Coons said. “I think once Oracle sees what we have here in Kansas City, they’re going to want to invest more, and it’s just going to create more jobs and opportunities for software companies.”
The fact that Oracle pitched an all-cash deal “well above” Cerner’s recent stock prices suggests a confident buyer that wants more than just Cerner’s technology — it wants Cerner's expertise, Weber said.
“I don’t think there’s any harm in having a deeper presence of a company like Oracle in Kansas City, and I fully expect they will be making additional investments of people and potentially even other technologies in Kansas City,” Weber said. “There’s absolutely nothing but upside in an increased presence of such a globally significant enterprise tech company like Oracle. ... I think it’s probably one of the best opportunities for Cerner to see even more growth than they would have on their own.”