Business

Cerner loses Mayo Clinic contract worth hundreds of millions of dollars to Epic

Cerner, one of the Kansas City area’s largest employers, will continue to derive some revenue from the Mayo Clinic during the phaseout.
Cerner, one of the Kansas City area’s largest employers, will continue to derive some revenue from the Mayo Clinic during the phaseout. The Kansas City Star

The Mayo Clinic confirmed this week that its new electronic health records system contract will go to Epic instead of North Kansas City-based Cerner Corp., which has had part of the Mayo business for years.

The new information technology system will replace three systems used in Mayo hospitals that have been provided by Cerner and GE.

The new contract value was not disclosed, but stock analysts said it is worth hundreds of millions of dollars over several years.

Deutsche Bank analyst George Hill called it a disappointing loss for Cerner but said the company remains “well positioned” in the competitive health information technology industry.

Cerner spokeman Dan Smith said Wednesday the company had no public statement about the Mayo decision but added that it wouldn’t affect any of Cerner’s employment and growth plans.

Mayo officials said a project team will begin working on the conversion in April and the new system will be built in 2015 and 2016, with implementation scheduled for 2017.

Cerner, one of the Kansas City area’s largest employers, will continue to derive some revenue from Mayo during the phaseout.

About 45,000 Mayo clinic workers will use the system for managing patient health records and “revenue cycle” information, according to information posted on the health system’s website.

Cerner and Epic are the two dominant competitors in the electronic medical records field for hospitals. Epic is privately held. Cerner is publicly traded.

Shares in Cerner, which was off slightly Tuesday, bounced back Wednesday and closed at $65.55, up 58 cents. Over the past year, the stock is up more than 17 percent.

Hill, who tracks Cerner stock, said, “We believe Cerner remains well positioned to win the large Department of Defense contract expected later this year and is also well positioned to pick up other business outside the U.S.”

Cerner is one of four vendor groups competing to win an $11 billion Defense Healthcare Management Systems Modernization contract from the U.S. government.

To reach Diane Stafford, call 816-234-4359 or send email to stafford@kcstar.com. Read more from Diane at kansascity.com/workplace. Twitter: @kcstarstafford.

  Comments