Oracle Corporation (NYSE:ORCL) made a $28 billion bet on Cerner Corporation to revolutionize healthcare. However, the electronic health records system has been linked to patient deaths, leading to a massive liability for Oracle.
What Happened: In 2021, Oracle acquired Cerner, a major EHR provider, with the intention of integrating its vast medical data into Oracle's AI models to create the EHR of the future, reported Business Insider on Monday.
However, Cerner's EHR system, which was responsible for managing the electronic health records of a quarter of all American hospitals, including those run by the Pentagon and the Department of Veterans Affairs (VA), was found to be severely flawed. The system's rollout at the VA, which serves 9 million veterans, was described as a "slow-moving catastrophe."
One feature of the EHR system caused over 11,000 orders for medical care to disappear into an "unknown queue," resulting in thousands of patients not receiving the treatment their doctors had ordered. These errors were contributing factors in three deaths.
Despite Ellison's vision for a futuristic, AI-driven healthcare system, the acquisition of Cerner has become a significant liability for Oracle. The company is now racing against time to fix the dysfunctional system it inherited from Cerner before more veterans are injured or killed.
Why It Matters: Oracle's acquisition of Cerner was intended to revolutionize healthcare by leveraging AI to improve patient outcomes and reduce costs. However, the flawed EHR system has led to a series of patient deaths, tarnishing Oracle's ambitious plans.
Despite the setbacks, Oracle's AI ambitions have not been entirely derailed. The company is reportedly in talks with Elon Musk's artificial intelligence startup, xAI, for a potential $10 billion deal to rent Oracle's AI servers. This deal, if finalized, would make xAI one of Oracle's largest customers.
The healthcare industry is increasingly turning to AI to streamline administrative tasks, optimize treatment plans, and enable more precise diagnostics. The global AI in healthcare market is expected to reach $148.4 billion by 2029, presenting a significant opportunity for AI companies like Oracle to drive innovation and transformation in the sector.
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