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Cerner Enters Lab Automation Market with Purchase of Labotix but Why?

Posted Mar 26 2013 12:00am

My impression about Cerner over roughly the past decade has been that the company left the pathology and clinical lab market behind in its pursuit of the larger EHR market. Now comes the news that it has acquired Labotix and seems to be interested in integrating its AP-LIS with this open-source lab automation system (see: Cerner Corporation Enters the Clinical Laboratory Automation Market by Acquiring Labotix Automation ). Below is an excerpt from the article about the purchase from the Dark Daily:

Never before has a major LIS vendor boldly acquired a lab equipment manufacturer with an intent to integrate and sell both products as a bundle to medical laboratories. In an unexpected move, healthcare informatics giant Cerner Corporation... purchased a clinical laboratory automation company....Cerner announced that it acquired Labotix Automation Inc., of Peterborough, Ontario. The acquisition gives Cerner an interesting foothold in the clinical laboratory automation market. For many pathologists and medical laboratory managers, the deal raises interesting questions, since Cerner—primarily known among labs for its laboratory information system (LIS) and its anatomic pathology laboratory information system (AP-LIS)—now is the owner of a company that manufactures hardware.....The flagship product for Labotix is what it calls the Rapid Response Universal Specimen Handling (RRUSH) system. One distinguishing feature about this lab automation system is that it is open source. It transports and sorts specimen containers, then delivers them to the appropriate analyzers for processing or storage. Labotix has systems installed at five client clinical laboratories in the United States, Europe, and the Middle East. The company has 22 associates and contractors. Cerner Corporation’s acquisition of Labotix, a manufacturer of automation systems for clinical laboratories, caught many in the medical laboratory testing industry by surprise. It will be the first time a major LIS vendor has acquired a lab hardware manufacturer with the assumed intent to sell a bundle that would feature both its LIS and its newly-acquire laboratory automation equipment....Labotix President and CEO John Gustafson told Dark Daily. “They have a laboratory information system and this acquisition gives them a line of laboratory automation equipment that is very complimentary.“ The open source architecture allows medical laboratory users to connect any lab analyzers or other instruments to the RRUSH system”....Labotix can trace its roots back to the late 1980s. That is when Rodney S. Markin, M.D., Ph.D., was developing early lab automation systems at the University of Nebraska in Omaha. In 1993, Markin founded LAB-InterLink, Inc., based in Omaha. By 2000 the company had merged with Labotix in Ontario.....Two years ago, Labotix acquired Integrated Laboratory Automation Solutions, Inc. (iLAS) of Troy, Michigan, and hired the iLAS employees....iLAS had a total laboratory automation (TLA) system that was designed by pathologists at Detroit Medical Center in Michigan.

Epic is certainly giving Cerner a run for its money -- it seems to me to be the EHR vendor of choice for large U.S. hospitals (see: Why Does Epic Keep Hammering Cerner? Mr. HIStalk's OpinionIs Cerner Modifying Its EMR Business Model?Epic Deemed Unbeatable by HIStalk in the Large Hospital EMR Market ). Could this Labotix purchase be a plot on the part of Cerner to halt the momentum of Epic's LIS (see: Allina Health Begins a Phased Rollout of Epic's Beaker LISLessons from the API Strategic Summit: Beaker LIS Is Not "Free" ). Nope. That can't be right. Beaker is the LIS choice de jour for some hospital CEOs and CIOs as part of their pursuit an "enterprise wide solution" with Epic. They would assume that a lights-out lab strategy is a form of energy conservation. I think that I now have the answer. Cerner may have purchased Labotix with its 22 associates and contractors as a blocking strategy to keep any smaller LIS-focused competitors, or even some of the IVDs, from acquiring it and getting an edge in that market. Time will tell.

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