Cerner Fights For Share In Electronic Medical Records Boom
This is a story about data. Lots and lots of data. And they're not just any data — they're extremely sensitive data.
The U.S. health system is undergoing a fundamental technological shift right now. Doctors and hospitals are finally moving to electronic health records, and it's not easy. A company called Cerner, based in Kansas City, Mo., has grown into one of the nation's biggest players in health information technology.
Its headquarters seems like a college campus, peppered with trees and walking paths, along with some architecture that looks a little like something out of Star Trek.
Brian Smith oversees this place, which is entirely different. He and many others at Cerner commonly call it "The Bunker."
It's one of the high-security data centers that Cerner has built in recent years, complete with concrete walls built to withstand a strong tornado and squads of armed guards. Each is designed to protect thousands of servers that contain confidential health information from hospitals and doctors' offices throughout the U.S. There are even backup generators for backup generators, to make sure that the data aren't compromised.
Secure data storage is a big selling point for Cerner. But the company also develops software for all kinds of medical settings, and it even sends tech people to hospitals to run their information systems. Founded in 1979, Cerner now employs 12,000 people, and it can't hire engineers fast enough.
Cerner started small. Founder and CEO Neal Patterson recently told shareholders that the company was hatched in 1979, when he and some friends were studying accounting at an iconic Kansas City park, called Loose Park.
"So we probably did more daydreaming about starting a company than we did studying for the exam," he says. "Loose Park was a beautiful place to have envisioned this."
Today, Cerner has a market value of around $17 billion. The company employs about 12,000 people, with more than half of them based in Kansas City. In the past two years alone, Cerner has hired 3,000 people.
Mike Nill, the company's chief operating officer, says if you're an engineer, you've got a job in Kansas City, Mo. "In fact, someone asked me last week, they said, 'What strategies did Cerner execute to survive the recession?' " says Nill. "My answer was, 'What recession?' "
Federal policies have spurred a lot of this growth. Chas Roades, with the consulting firm The Advisory Board, says that in the past few years the government has made over $20 billion available to support health providers in digitizing their records.
"It was a little like when the railroads were started in late 19th and early 20th century," Roades says. "It's public funding that has jump-started a big, big wave of investment in these IT systems among hospitals and doctors."
It has been a gold rush for companies like Cerner. Roades says he often hears that a hospital is spending a third of its capital on information technology. All this federal money has fueled a lot of companies, but Cerner is one of two companies that have really come out ahead.
"Our count is they're in 15 percent of all U.S. hospitals, nearly 800 hospitals," says Jason Hess, of KLAS Research. He says Cerner is locked in tough competition with Epic, a private company based in Wisconsin. Epic is No. 1.
But this rapid growth can present huge challenges. Hess says it can be difficult to recruit enough qualified engineers and maintain quality for software that's changing fast.
So while this is a story about data, all the data Cerner is capturing is just the beginning of a much bigger story.
CEO Patterson says the challenge now is figuring out what to do with the data. What does a cholesterol test mean, for example, in light of a patient's medical history? Or what's the best medicine for a particular patient? Keeping people healthy and out of emergency rooms or in specialists' offices is where the cost savings will come from, Patterson says.
Achieving those results is the challenge that Cerner and a whole lot of other companies and providers are now racing to figure out.
This piece is part of a collaboration among NPR, KCUR and Kaiser Health News.
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The U.S. health care system is going digital. As we heard on our program yesterday, the federal government is offering incentives to doctors and hospitals to use electronic medical records. Soon the government will start penalizing those who don't. It's a huge moment of opportunity for companies that designed health records systems. Reporter Elana Gordon visited one company in Kansas City called Cerner that has emerged as one of the industry leaders.
ELANA GORDON, BYLINE: This is a story about data, lots and lots of data. And not just any data, extremely sensitive data. Brian Smith oversees this place that he and many others at Cerner commonly refer to as the bunker.
BRIAN SMITH: It's probably similar to a military facility where access around the facility is controlled and then at multiple levels as you get deeper into the facility.
GORDON: This is one of the data centers that Cerner has built in recent years, as it's gone beyond just a basic electronic medical record company. And it's a stark contrast to Cerner's overall headquarters, which seems more like a college campus with a bit of "Star Trek"-like architecture.
SMITH: Flash your badge up there.
GORDON: Inside the bunker, I get clearance from an armed guard, and Smith leads me to the entrance. It's a narrow clear long tube. It spins around me and then opens on the other side.
SMITH: It's kind of James Bond stuff.
GORDON: This data center and Cerner's other ones are responsible for health information contained in hundreds of hospitals and doctor's offices throughout the U.S. In other words, this could be your data, that prescription your doctor just entered into his or her computer, that lab result that just got processed. The transactions go through here in real time.
SMITH: This is the sound of the technology that supports health care across the United States.
GORDON: Smith and I go in a temperature-controlled room full of thousands of servers. Data storage is a big selling point for Cerner, but it's one part of what the company does. It has software for all sorts of medical record settings and offers other IT services, like sending actual Cerner tech people into hospitals to run the systems.
According to company figures, 45,000 doctors now use Cerner's record systems. But the company started small. Founder and CEO Neal Patterson recently told shareholders that Cerner came out of a meeting of friends studying accounting at an iconic Kansas City park called Loose Park.
NEAL PATTERSON: So we probably did more daydreaming about starting a company than we did studying for the exam. So through that interaction, Loose Park is a beautiful place to have envisioned this.
GORDON: Today, Cerner has a market value around $17 billion. The company employs about 12,000 people, with more than half based in Kansas City. In the last two years alone, Cerner has hired 3,000 people. Mike Nill, the company's chief operating officer, says if you're an engineer, you've got a job in Kansas City.
MIKE NILL: In fact, someone asked me - they said, what strategies did Cerner execute to survive the recession? And my answer was, you know, what recession?
GORDON: Federal policies have spurred a lot of this growth. Chas Roades, with the consulting firm The Advisory Board, says in the last few years, the government has made over $20 billion available to support health providers in digitizing their records.
CHAS ROADES: It was a little bit like when the railroads were started in the late 19th and early 20th century. It's sort of public funding that has jumpstarted a big, big wave of investment in these IT systems among hospitals and doctors. So every hospital system that you talk to now is spending a lot of money or has just finished spending a lot of money to put in place electronic health records. And it's really expensive.
GORDON: It has been a gold rush for companies like Cerner. Roades says he often hears that a hospital is spending one-third of its capital on information technology. The federal money has fueled a lot of companies, but Cerner is one of two that have really come out ahead. Jason Hess is with KLAS research.
JASON HESS: You know, our count is they're in 15 percent of all U.S. hospitals, almost, you know, nearly 800 hospitals.
GORDON: Hess says Cerner is locked in tough competition and is trailing to the private company Epic based in Wisconsin. In fact, Cerner lost a huge contract to Epic several years ago with the big Kansas City hospital system.
HESS: You know, we kind of internally call it a two-horse race.
GORDON: But this kind of growth can present huge challenges. Hess says it can be hard to recruit enough qualified engineers and maintain the quality of continually evolving software. Digital record systems can still be a huge headache for doctors, so making sure they're user friendly is key too. Now, initially, I said this was a story about data. But Cerner CEO Neal Patterson and others in the health industry say that's just part of it.
Patterson says now the critical part is figuring out what to do with that data, how to analyze a cholesterol test, for example, and what it means in light of the patient's medical history, or how to find the best medication for an individual; in other words, how to use and share that data so that doctors and patients can make the best health care decisions possible.
PATTERSON: That's where the cost savings are going to come from is keep you out of hospital, keep you out of emergency, keep you out of the ICU and keep you away from the specialist but make you healthier.
GORDON: Achieving those results is the challenge that Cerner and a whole lot of other companies and providers are now racing to figure out. For NPR News, I'm Elana Gordon.
CORNISH: This story comes to us thanks to a partnership of NPR, KCUR and Kaiser Health News. Transcript provided by NPR, Copyright NPR.