eHealth giant, Cerner, has announced plans to buy Siemens‘ Health Services  IT Unit for $1.3 billion in an all-cash transaction.

The acquisition is expected to close in the first quarter of 2015, and is still subject to applicable approvals.

As part of the agreement, Cerner and Siemens will enter into a three-year strategic alliance building on Cerner’s expertise in healthcare IT with Siemens’ strong diagnostics, imaging, and therapeutic businesses.

Cerner officials have said the company will continue to support Siemens’s core platforms. This includes Siemens’s Soarian platform, which in 2009 was set to be implemented in 37 hospitals and 300 clinics across Gauteng as part of the GDoH’s drive to create a single electronic health record for patients across the province. Siemens’ Soarian MedSuite healthcare IT software was meant be implemented as part of the tender awarded to Baoki Consortium; however, the deal later fell through.

Cerner officials said the Siemens Health Services’ acquisition would create an entity with an estimated $4.5 billion of annual revenue -with about $650 million going into research and development – and add around 18,000 new facilities to Cerner’s client base. “From a strategic perspective, we look at this as a really good fit to our organisation,” said Cerner President, Zane M. Burke.

Burke revealed that Siemens workers would become Cerner employees as of the closing, creating the world’s largest workforce in the field. According to Burke, the cost savings are projected to come from centralised operations and corporate overhead. “We know this industry, this is exactly what we know how to do,” said Burke.

A press release issued by Siemens stated that the sale to Cerner is keeping in line with its “Siemens — Vision 2020” strategy to drop low-performing businesses and concentrate on core industries. “In the recent years, we have continuously invested in our HS-portfolio and achieved significant progress on the technology side. At the same time, we realised that business success of our hospital information systems could not always keep pace with our competition,” said CEO of Siemens Healthcare, Hermann Requardt.

“Additionally an increasing number of country-specific requirements, such as resulting from US healthcare reform, make it increasingly challenging to achieve sufficient scale effects. Going forward we will focus on the development of information systems that support our businesses in laboratory diagnostics as well as imaging and therapy,” continued Requardt.

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