LIS Market Will Change After Oracle, CliniSys Deals

Two acquisitions in recent weeks may trigger significant shifts in the LIS products labs can buy

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CEO SUMMARY: With its purchase of Cerner Corporation, Oracle becomes the owner of Cerner’s Millennium laboratory information system (LIS) and CoPathPlus, Cerner’s anatomic pathology LIS. Only three weeks later, CliniSys, a division of Roper Technologies, announced it was acquiring Horizon Lab Systems and would combine the Horizon LIS with its Sunquest Information Systems’ LIS.

IN JUST THREE WEEKS, TWO MAJOR LIS VENDORS announced significant deals, raising important questions about what these moves mean for clinical laboratory directors and pathologists. 

In an acquisition worth $28 billion, cloud database giant Oracle in Austin, Texas, said on Dec. 21, 2021, that it had agreed to buy Cerner Corporation, the healthcare information technology company in Kansas City, Mo., that is best known for its cloud-based electronic health record (EHR) products. Oracle will now also own Cerner’s other software products, including the Cerner Millennium laboratory information system (LIS) and CoPathPlus, Cerner’s anatomic pathology LIS.

Then, on Jan. 18, 2022, U.K.-based CliniSys, a division of Roper Technologies, reported that it had acquired Horizon Lab Systems in Raleigh, N.C., along with the disclosure that it planned to combine the Horizon LIS with the LIS of its Sunquest Information Systems division, located in Tucson, Ariz. The expanded firm will be known by the CliniSys name, although it’s possible that Sunquest will keep its branded product line.

Horizon develops lab tests outside of healthcare in areas such as environmental management and agriculture. Financial terms of the deal weren’t disclosed.

“These are clearly major events and will change the LIS market landscape,” said Dennis Winsten, President at Dennis Winsten and Associates, an LIS consulting firm in Tucson, Ariz. 

Clinical lab administrators and pathologists should note that the CliniSys and Oracle deals are quite different from each other. In Oracle’s case, it hopes to use Cerner to gain a larger presence in healthcare, hospitals, and clinical laboratories. (See sidebar here for more details.) 

“For years, Oracle had pockets of horizontal solutions skinned at the edges for healthcare, but this acquisition signifies the company’s entry into the industry as a major contender—inheriting one of the two largest electronic health records vendors (the other one being Epic),” Daniel Hong, Vice President and Research Director at Forrester, wrote in a Jan. 3 blog entry. 

Cerner already uses Oracle’s database technology, so there is compatibility with the software and integration concerns are low, Winsten said.

CliniSys, on the other hand, is bringing in Horizon to stretch beyond the clinical lab market, such as environmental laboratory testing. (See sidebar here for more details.) Integration of technologies between CliniSys, Horizon, and Sunquest may be challenging, Winsten predicted.

“I don’t see any software synergies,” he noted. “They have different operating systems, different programming languages, and different databases.”

LIS Acquisitions Often Fail

Winsten said time has shown that non-healthcare firms buying healthcare companies in the clinical laboratory field doesn’t always turn out well for the acquired parties.

“Historically, whenever a company that doesn’t have healthcare as its core business thinks it wants to get into this industry, it acquires a company that in many cases is doing quite well,” Winsten observed. “Frequently, that acquisition can turn out to be the kiss of death for the acquired healthcare company. Many of these types of arrangements have not always gone well, particularly when it involved an LIS company. 

“Several historical examples make this point,” he continued. “3M acquired MedLab, which is now gone. General Electric acquired an up-and-coming company, Triple G Systems, which is gone. McKesson acquired Advanced Laboratory Systems, also now gone.” 

Because a significant number of hospital and health system labs use the Cerner Millennium LIS and CoPathPlus, those lab clients will want to closely follow how Oracle plans to handle those products, along with Cerner’s other hospital LIS systems. 

Sunquest Part of CliniSys

What has unfolded at Roper Industries is that CliniSys, based in the United Kingdom, is now the operating division that includes Sunquest, which has its flagship LIS, along with Sunquest CoPathPlus and Sunquest PowerPath, used by pathology laboratories. 

Winsten thinks that the LIS market may tip in favor of younger and more nimble LIS companies. “The folks who are making it in the LIS business are the smaller, more focused LIS companies,” Winsten noted. “One reason is that the scale of the big LIS companies means they must generate significant numbers of new—and sizeable—lab clients to meet the revenue goals of their parent firms. 

“By contrast, the newer and smaller LIS companies can be competitive working with smaller labs and pathology group practices,” he explained. “These young LIS providers don’t need a whole lot to survive and grow.”

‘Big Data’ Plays? 

What may be a success factor in Oracle’s ownership of Cerner and the CliniSys/Sunquest/Horizon combination is that the LIS systems generate and store huge amounts of valuable patient lab test data. 

Oracle and CliniSys may learn to sell that de-identified data in ways that produce a substantial stream of new revenue. This may be particularly true because of the growing interest in pooling genetic data from lab tests with other types of patient data.

Contact Dennis Winsten at 520-331-4656 or dwinsten@msn.com.

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