Businessmodel of Cerner

Customer Segments

Cerner has a niche market business model, with a specialized customer segment. The company primarily targets its offerings at healthcare-related institutions, including managed care organizations, physician groups and networks, medical centers, home health agencies, imaging centers, blood banks, pharmacies, integrated delivery networks, and public health agencies. The majority of its sales come from hospitals and health systems. That said, it also offers its solutions to employers, academic research institutions, and governments.

Value Proposition

Cerner offers three primary value propositions: convenience, performance, and brand/status.

The company offers convenience by providing an end-to-end, automated healthcare management solution. Its systems provide information for patients at every phase of the care process. This makes it easier for healthcare providers to be more effective at prevention and treatment and reduce costs.

The company has demonstrated strong performance by producing positive outcomes for clients. Some high-profile examples include the following:

• Lafayette General Health used Cerner data analytics to save 65 seconds per patient visit
• Via Christi Health used Cerner RevWorks to reduce A/R by $83 million
• Mission Health used Cerner Patient Observer to reduce patient falls to zero
• Rocky Mountain used Cerner’s PowerChart to dramatically reduce antipsychotics usage
• Vail Valley Medical Center used Cerner’s Model Experience to speed up doctor optimization
• Legacy Health used Cerner solutions to more efficiently track pathology specimens The company has established a powerful brand due to its success. It bills itself as the largest independent health information technology firm in the world, with its systems set-up in over 20,000 facilities. Its revenues have experienced five- and ten-year compound annual growth rates (CAGRs) of 14% or more. Also, its net earnings have seen CAGRs of 17% or more in recent five-year and ten-year periods. Lastly, Cerner has been recognized as one of the “World’s Most Innovative Companies” (Forbes) and as one of the “World’s Most Admired Companies” (Fortune).

Channels

Cerner’s main channel is its direct sales force, which operates from offices in over 25 countries. The company promotes its offering through its website, social media pages, and participation in seminars, trade shows, and conferences. It sponsors some executive user conferences.

Customer Relationships

Cerner’s customer relationship is primarily of a personal assistance nature. It offers customer service 24 hours per day, 365 days per year in order to be responsive to the needs of healthcare providers. Assistance is provided by its client service teams, which include operations leaders, technical team leaders, and systems-trained support analysts who can handle critical client requests. Service channels include phone (the Cerner Support hotline), online chat, and e-mail.

Despite this orientation, there is also a self-service element in the form of customizable educational and learning resources on its website. Specifically, the uLearn portal provides web-based and instructor-led training programs.

Key Activities

Cerner’s business model entails designing and developing software solutions for its customers.

Key Partners

Cerner maintains more than 180 partnerships with organizations that help it optimize the benefits its customers obtain from its solutions. These entities primarily consist of service, technology, and medical device providers. Specific partners include Apple, Global Capacity, Deffenbaugh, Wolters Kluwer, SenSage, Mobile Doctors, CareFusion, Claritas Genomics, McKesson, Leidos, and Lexi-Comp.

Key Resources

Cerner’s main resources are its human resources, who include over 5,900 associates involved in research and development activities. The company also places a high priority on its intellectual property, with over 300 granted patents and hundreds of applications pending.

Cost Structure

Cerner has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent product enhancements. Its biggest cost driver is sales and client service. Other major drivers are costs of revenue, a variable cost, and software development.

Revenue Streams

Cerner has four revenue streams:

• System sales
• Support and maintenance
• Services
• Reimbursed travel