Dive Brief:
- Oracle is reportedly letting go hundreds of employees and rescinding job offers from its Cerner health software unit, largely due to ongoing missteps in its contract with the Department of Veterans Affairs.
- The layoffs, reported by Insider, come after the VA renegotiated its contract with Cerner in May over patient safety issues. They also follow massive job cuts from other tech giants this year as an M&A and hiring binge during the COVID-19 pandemic meets revenue declines and inflation.
- It’s not the first time Oracle has pared back Cerner’s workforce. Since Oracle acquired Cerner last year, the Austin, Texas-based company has reportedly fired almost 3,000 employees at Cerner across its marketing, engineering, accounting, legal and product teams.
Dive Insight:
Oracle acquired Cerner for $28.3 billion in 2022 in the software firm’s largest acquisition ever. With the deal, Oracle also inherited the electronic health records vendor’s beleaguered contract with the VA. The department hired Cerner in 2018 to replace its homemade medical records with Cerner’s EHR, but the project has moved slowly and its spending ballooned well beyond initial estimates.
The first VA hospital to use the new EHR went live in 2020, and four sites deployed the system last year. However, the VA decided to put future deployments on hold in April and focus on improving existing sites after a watchdog found “high-risk” patient safety issues at Mann-Grandstaff VA Medical Center attributed to the EHR.
One report found an error where lab orders were sent to an undetectable location, resulting in harm to multiple patients.
The VA’s recent contract renegotiation increases its ability to hold Cerner accountable for outages, usability and interoperability. It includes stronger performance expectations and larger financial credits to the VA if Oracle Cerner doesn’t meet requirements, according to the department.
Cerner did not respond to a request for comment on the layoffs, which come after Oracle announced record annual sales.
In the fourth quarter, Oracle reported revenue up 17% and profit up 4% year over year, topping Wall Street expectations and pushing its stock to a record high last week.
Oracle acquired Cerner to serve as a growth engine for Oracle’s ambitions in the lucrative healthcare space. Oracle’s goal is to create a cloud-enabled health data platform spanning the company’s EHR, human capital management, claims processing and other businesses.
Soon after the acquisition was closed, Oracle Chairman Larry Ellison announced plans to develop a national health records database linking the disparate medical records in the U.S. Development of that database is “going great,” with recent launches including automatic record de-duplication, ex-Cerner CEO and current Oracle Health Chairman David Feinberg told Healthcare Dive in April.
