Cerner Fights For Share In Electronic Medical Records Boom

This is a story about data. Lots and lots of data. And they're not just any data — they're extremely sensitive data.

The U.S. health system is undergoing a fundamental technological shift right now. Doctors and hospitals are finally moving to electronic health records, and it's not easy. A company called Cerner, based in Kansas City, Mo., has grown into one of the nation's biggest players in health information technology.

Its headquarters seems like a college campus, peppered with trees and walking paths, along with some architecture that looks a little like something out of Star Trek.

Brian Smith oversees this place, which is entirely different. He and many others at Cerner commonly call it "The Bunker."

It's one of the high-security data centers that Cerner has built in recent years, complete with concrete walls built to withstand a strong tornado and squads of armed guards. Each is designed to protect thousands of servers that contain confidential health information from hospitals and doctors' offices throughout the U.S. There are even backup generators for backup generators, to make sure that the data aren't compromised.

Secure data storage is a big selling point for Cerner. But the company also develops software for all kinds of medical settings, and it even sends tech people to hospitals to run their information systems. Founded in 1979, Cerner now employs 12,000 people, and it can't hire engineers fast enough.

Cerner started small. Founder and CEO Neal Patterson recently told shareholders that the company was hatched in 1979, when he and some friends were studying accounting at an iconic Kansas City park, called Loose Park.

"So we probably did more daydreaming about starting a company than we did studying for the exam," he says. "Loose Park was a beautiful place to have envisioned this."

Today, Cerner has a market value of around $17 billion. The company employs about 12,000 people, with more than half of them based in Kansas City. In the past two years alone, Cerner has hired 3,000 people.

Mike Nill, the company's chief operating officer, says if you're an engineer, you've got a job in Kansas City, Mo. "In fact, someone asked me last week, they said, 'What strategies did Cerner execute to survive the recession?' " says Nill. "My answer was, 'What recession?' "

Federal policies have spurred a lot of this growth. Chas Roades, with the consulting firm The Advisory Board, says that in the past few years the government has made over $20 billion available to support health providers in digitizing their records.

"It was a little like when the railroads were started in late 19th and early 20th century," Roades says. "It's public funding that has jump-started a big, big wave of investment in these IT systems among hospitals and doctors."

It has been a gold rush for companies like Cerner. Roades says he often hears that a hospital is spending a third of its capital on information technology. All this federal money has fueled a lot of companies, but Cerner is one of two companies that have really come out ahead.

"Our count is they're in 15 percent of all U.S. hospitals, nearly 800 hospitals," says Jason Hess, of KLAS Research. He says Cerner is locked in tough competition with Epic, a private company based in Wisconsin. Epic is No. 1.

But this rapid growth can present huge challenges. Hess says it can be difficult to recruit enough qualified engineers and maintain quality for software that's changing fast.

So while this is a story about data, all the data Cerner is capturing is just the beginning of a much bigger story.

CEO Patterson says the challenge now is figuring out what to do with the data. What does a cholesterol test mean, for example, in light of a patient's medical history? Or what's the best medicine for a particular patient? Keeping people healthy and out of emergency rooms or in specialists' offices is where the cost savings will come from, Patterson says.

Achieving those results is the challenge that Cerner and a whole lot of other companies and providers are now racing to figure out.

This piece is part of a collaboration among NPR, KCUR and Kaiser Health News.

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