netrashetty
Netra Shetty
Cerner Corporation (NASDAQ: CERN) is an international health care information technology corporation that specializes in providing complete systems for hospitals and other medical organizations to manage and integrate all electronic medical records, Computer physician order entry (CPOE) and financial information.[1]
Cerner claims to be the largest provider of electronic medical systems in the United States.[2][3] Its largest competitor, McKesson Corporation, is larger in size but McKesson has income from other non-technology medical sources.
As of Second Quarter 2009 its systems are licensed by 8,000 facilities around the world including 2,100 hospitals, 1,500 pharmacies and 3,300 physician practices representing 30,000 physicians.[4]
It has more than 8,200 employees. As of June 2006, approximately 1,900 associates in the United States and 600 associates in India were involved full-time in the software development aspect of the company. Cerner has more than 6,000 clients worldwide.
The US-based Cerner Corporation is the second largest provider by market share of healthcare information technology (HIT) services in the healthcare industry Cerner's primary business involves leasing software to help medical organizations manage data and finances electronically.
Hospitals have invested heavily in HIT technology, citing its ease and lower cost as reasons for having adopted an IT-based infrastructure. Increases in healthcare spending, safety and quality concerns, and insufficient care create a favorable environment for IT-based healthcare.[1] Since those issues aren't isolated to the U.S, Cerner has pursued aggressive growth in international markets. Cerner invests more than a third of its operating expense to develop IT services for international markets while only 16% of its revenues are from its international segment. [2]
Due to the 2008 global economic crisis, the healthcare sector has decreased its investment in HIT. Since Cerner relies exclusively on service and support contracts, the company acknowledges that a nationwide slowdown in hospital spending will halt growth.[2] [3] The company is focusing on growth in the international sector in order to compensate for revenue lost in the U.S. [4]
Business Overview
Contents
1 Business Overview
1.1 Business and Financial Metrics[7]
1.2 Business Segments[8]
1.2.1 Services (39% of total revenue)
1.2.2 System Sales (30% of total revenue)
1.2.3 Support and Maintenance (29% of total revenue)
1.2.4 Reimbursed Travel (2% of total revenue)
2 Key Trends and Forces
2.1 There is a Global Movement Towards Digitizing Healthcare
3 Competition
4 References
Founded in 1979, the company operates primarily in the United States, with its management headquarters located in Kansas, Missouri. [5] Cerner's business involves providing software services to help medical institutions manage patients, finances, and technologies that assist clinicians in treating patients. Cerner also provides HIT services to blood banks, medical libraries, laboratories, government agencies, drug manufacturers, and any institution in the healthcare industry. Its primary goal is to maximize time and cost efficiency without sacrificing adequate patient healthcare.[6]
Business and Financial Metrics[7]
In 2009, Cerner generated a net income of $93.5 million on $1.67 billion in revenue. This represents a 2.5% increase in net income on a 0.2% dip in total revenues from 2008, when the company earned $188.7 million on $1.68 billion in revenue.
Business Segments[8]
Cerner has four primary sources of revenue, all of which are IT services sold on a per-contract basis. Cerner divides itself into two geographic segments: domestic and international. Both of these segments offer all of the following services.
Services (39% of total revenue)
This is the largest segment and assists customers in the installation, implementation, and usage of Cerner's HIT technology. Cerner's client employees are educated on how to use the provided software applications. [9] When Cerner upgrades its IT systems, it also earns more revenue by charging clients to assist in the process of upgrading.
System Sales (30% of total revenue)
Cerner sells third-party licensed software from HP, IBM, Microsoft and Oracle after customizing the software for healthcare needs.[9] Cerner also sells hardware computer equipment to support the licensed software.
Support and Maintenance (29% of total revenue)
This segment offers 24/7 support to all of its clients on a contract basis. The contracts also include unlimited upgrades and maintenance until the contract matures. [9] These services begin as soon as professional services finish implementing the HIT technology. Since most of Cerner's clients subscribe to support and maintenance, the percentage of revenues of professional and support services are around the same.
Reimbursed Travel (2% of total revenue)
Cerner's travel and shipping charges are paid by the clients in the form of reimbursed travel.[10]
[8]
Key Trends and Forces
There is a Global Movement Towards Digitizing Healthcare
The emergence of the electronic medical record has helped hospitals manage data efficiently. Whereas transportation and human error were important factors in paper healthcare systems, digital systems are instant and accessible without error. Hospitals use IT services to ensure smooth performance, ease of operability, proper patient care, and financial flexibility.While the adoption of IT services to manage health institutions has been slow, there is increasing demand for permanent IT-based healthcare systems. [11] Cerner and other HIT have the opportunity to provide their services to health institutions in the long term.[12]
Competition
Products offered by companies in the healthcare information services industry are different and have different functionality. However, most of Cerner's competitors offer some form of IT management service to health institutions.
Cerner's direct competitors include:
McKesson (MCK): is one of the world's largest corporations in the pharmaceutical distribution industry. McKesson distributes ethical and proprietary drugs, health and beauty care products, pharmacy hardware, and medical and surgical supplies throughout North America. McKesson also provides enterprise-level software services to hospitals and other healthcare organizations.
HLTH (HLTH): HLTH Corp (HLTH) is the parent company of WebMD Health (WBMD), and owns ViPS, and Porex. WebMD operates a number of online web sites providing health and wellness information, ViPS is a data analysis and IT services firm. Porex designs and manufactures porous plastics for use in medical products like pipettes, test tubes, and vents.
Eclipsys (ECLP): Eclipsys Corporation (ECLP) develops and licenses proprietary software for the healthcare industry. The end users of the software include clinicians, physicians, nurses, and administrative support and ancillary staff of healthcare organizations. The company also provides professional services such as implementation, integration, product, training, and maintenance support, outsourcing, remote hosting applications, network services, and consulting services to its customers.
WebMD Health (WBMD): WebMD creates a private version of its web portal. WebMD then stores a detailed health record for each employee and offers customized content on preventative care based on the employee's health profile. It also uses this information to match the employee with the best healthcare plan. WebMD charges both setup and monthly fees for its corporate services.
Allscripts Healthcare Solutions (MDRX): AllScripts HealthCare Solutions provides clinical software and information services for physicians that assist in medication.
Cerner claims to be the largest provider of electronic medical systems in the United States.[2][3] Its largest competitor, McKesson Corporation, is larger in size but McKesson has income from other non-technology medical sources.
As of Second Quarter 2009 its systems are licensed by 8,000 facilities around the world including 2,100 hospitals, 1,500 pharmacies and 3,300 physician practices representing 30,000 physicians.[4]
It has more than 8,200 employees. As of June 2006, approximately 1,900 associates in the United States and 600 associates in India were involved full-time in the software development aspect of the company. Cerner has more than 6,000 clients worldwide.
The US-based Cerner Corporation is the second largest provider by market share of healthcare information technology (HIT) services in the healthcare industry Cerner's primary business involves leasing software to help medical organizations manage data and finances electronically.
Hospitals have invested heavily in HIT technology, citing its ease and lower cost as reasons for having adopted an IT-based infrastructure. Increases in healthcare spending, safety and quality concerns, and insufficient care create a favorable environment for IT-based healthcare.[1] Since those issues aren't isolated to the U.S, Cerner has pursued aggressive growth in international markets. Cerner invests more than a third of its operating expense to develop IT services for international markets while only 16% of its revenues are from its international segment. [2]
Due to the 2008 global economic crisis, the healthcare sector has decreased its investment in HIT. Since Cerner relies exclusively on service and support contracts, the company acknowledges that a nationwide slowdown in hospital spending will halt growth.[2] [3] The company is focusing on growth in the international sector in order to compensate for revenue lost in the U.S. [4]
Business Overview
Contents
1 Business Overview
1.1 Business and Financial Metrics[7]
1.2 Business Segments[8]
1.2.1 Services (39% of total revenue)
1.2.2 System Sales (30% of total revenue)
1.2.3 Support and Maintenance (29% of total revenue)
1.2.4 Reimbursed Travel (2% of total revenue)
2 Key Trends and Forces
2.1 There is a Global Movement Towards Digitizing Healthcare
3 Competition
4 References
Founded in 1979, the company operates primarily in the United States, with its management headquarters located in Kansas, Missouri. [5] Cerner's business involves providing software services to help medical institutions manage patients, finances, and technologies that assist clinicians in treating patients. Cerner also provides HIT services to blood banks, medical libraries, laboratories, government agencies, drug manufacturers, and any institution in the healthcare industry. Its primary goal is to maximize time and cost efficiency without sacrificing adequate patient healthcare.[6]
Business and Financial Metrics[7]
In 2009, Cerner generated a net income of $93.5 million on $1.67 billion in revenue. This represents a 2.5% increase in net income on a 0.2% dip in total revenues from 2008, when the company earned $188.7 million on $1.68 billion in revenue.
Business Segments[8]
Cerner has four primary sources of revenue, all of which are IT services sold on a per-contract basis. Cerner divides itself into two geographic segments: domestic and international. Both of these segments offer all of the following services.
Services (39% of total revenue)
This is the largest segment and assists customers in the installation, implementation, and usage of Cerner's HIT technology. Cerner's client employees are educated on how to use the provided software applications. [9] When Cerner upgrades its IT systems, it also earns more revenue by charging clients to assist in the process of upgrading.
System Sales (30% of total revenue)
Cerner sells third-party licensed software from HP, IBM, Microsoft and Oracle after customizing the software for healthcare needs.[9] Cerner also sells hardware computer equipment to support the licensed software.
Support and Maintenance (29% of total revenue)
This segment offers 24/7 support to all of its clients on a contract basis. The contracts also include unlimited upgrades and maintenance until the contract matures. [9] These services begin as soon as professional services finish implementing the HIT technology. Since most of Cerner's clients subscribe to support and maintenance, the percentage of revenues of professional and support services are around the same.
Reimbursed Travel (2% of total revenue)
Cerner's travel and shipping charges are paid by the clients in the form of reimbursed travel.[10]
[8]
Key Trends and Forces
There is a Global Movement Towards Digitizing Healthcare
The emergence of the electronic medical record has helped hospitals manage data efficiently. Whereas transportation and human error were important factors in paper healthcare systems, digital systems are instant and accessible without error. Hospitals use IT services to ensure smooth performance, ease of operability, proper patient care, and financial flexibility.While the adoption of IT services to manage health institutions has been slow, there is increasing demand for permanent IT-based healthcare systems. [11] Cerner and other HIT have the opportunity to provide their services to health institutions in the long term.[12]
Competition
Products offered by companies in the healthcare information services industry are different and have different functionality. However, most of Cerner's competitors offer some form of IT management service to health institutions.
Cerner's direct competitors include:
McKesson (MCK): is one of the world's largest corporations in the pharmaceutical distribution industry. McKesson distributes ethical and proprietary drugs, health and beauty care products, pharmacy hardware, and medical and surgical supplies throughout North America. McKesson also provides enterprise-level software services to hospitals and other healthcare organizations.
HLTH (HLTH): HLTH Corp (HLTH) is the parent company of WebMD Health (WBMD), and owns ViPS, and Porex. WebMD operates a number of online web sites providing health and wellness information, ViPS is a data analysis and IT services firm. Porex designs and manufactures porous plastics for use in medical products like pipettes, test tubes, and vents.
Eclipsys (ECLP): Eclipsys Corporation (ECLP) develops and licenses proprietary software for the healthcare industry. The end users of the software include clinicians, physicians, nurses, and administrative support and ancillary staff of healthcare organizations. The company also provides professional services such as implementation, integration, product, training, and maintenance support, outsourcing, remote hosting applications, network services, and consulting services to its customers.
WebMD Health (WBMD): WebMD creates a private version of its web portal. WebMD then stores a detailed health record for each employee and offers customized content on preventative care based on the employee's health profile. It also uses this information to match the employee with the best healthcare plan. WebMD charges both setup and monthly fees for its corporate services.
Allscripts Healthcare Solutions (MDRX): AllScripts HealthCare Solutions provides clinical software and information services for physicians that assist in medication.
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