Will COVID-19 slow down EHR spend, implementation post-pandemic? Cerner doesn't think so

Cerner reported net income dropped 11 percent for the first quarter, but it reported a 2 percent increase in revenue to $1.41 billion and it expects second quarter revenue to hit between $1.34 billion and $1.39 billion.

Many hospitals postponed or canceled elective surgeries during the COVID-19 pandemic, which is a big revenue source for them. In some cases, hospitals may scale back capital projects and other initiatives during this time of financial hardship. During Cerner's first quarter earnings call, Cerner Executive Vice President and CFO Marc Naughton was asked about the timeline for when hospitals will start spending again.

"Many of our clients that were forced to pause a project or defer start are eager to get on with those projects," said Mr. Naughton, as transcribed by Seeking Alpha. "And I think everything that's going on currently is emphasizing how important these projects are for them for their operations and to operate more efficiently. Certainly the CARES Act and likely subsequent stimulus packages are going to help our clients be financially able to go ahead and run their business."

He said many hospitals have realized the importance of data gathering and digital communication to coordinate the response to COVID-19, so the company believes organizations will maintain or strengthen funding for those technologies and put additional spending behind new opportunities that include telehealth.

"We're working on search capacity and how [hospitals] think about management of their supply side, but those are the same tools and capabilities that are going to be relevant to them in terms of how they think about medium-term strategies to manage the expense line and think about their labor and workforce strategies and what that looks like to make money at Medicare and Medicaid rates," said Donald Trigg, president of Cerner. "Relevant to the COVID-19 response, we're going to be central to those economic recovery strategies and those revenue recovery strategies. And if we're smart, we'll play into larger strategies around the efforts of our clients to rethink their business strategies on a multiyear basis."

John Peterzalek, chief client and services officer, also spoke to Cerner's expectations for the business post-pandemic, mentioning that the company is expecting $1 billion to $1.2 billion of booking guidance for the next quarter, which is similar to what the company usually does.

"As we're working through a different new normal right now, I think both us and our clients are looking at different ways to deliver the services," said Mr. Peterzalek. "It's important to note that the majority of our clients have not stopped their projects. We continue to make progress and we're working on new and innovative ways to deliver these services and I do believe we'll see a new normal evolve."

Mr. Trigg also expects to see hospital consolidation and hospital acquisition of physician practices accelerate over the next several months. In some cases, when hospitals join health systems or merge they convert to a single medical record system, which may or may not be Cerner. Mr. Trigg said the company is thinking about how its HealtheIntent platform can become part of the enabling technology for integrating technology in acquisitions.

"It was built as an EHR-agnostic platform and is very well suited to the kinds of strategies that will be required to make those practice acquisitions work inside a larger clinically integrated network," said Mr. Trigg. "We think it's a trend that probably accelerates and we need to be smart and effective in terms of positioning HealtheIntent capabilities to make it work."

The company has also been working on virtual EHR go-lives during the pandemic. Macon Community Hospital in Lafayette, Tenn., became the first hospital to undergo a virtual Cerner EHR go-live on the company's cloud-based CommunityWorks EHR system. The 25-bed critical access hospital went live on March 30.

Cerner also opened access to its de-identified data stored in the HealtheDataLab, powered by Amazon Web Services, which includes data on COVID-19 patients.

More articles on EHRs:
Cerner falls but remains dominant alongside Epic for EHR market share
Epic, Cerner, Allscripts support HHS interoperability delay amid COVID-19
How Northwell, Cleveland Clinic & others are using EHR data during the pandemic

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