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Cerner: We'll keep Siemens site and data center

Buyer Cerner to cut 'low-hanging fruit'

It's not what it used to be, but Siemens Health Services (f/k/a Shared Medical Systems) remains one of the western suburbs' big tech employers. Will new owner Cerner Corp. keep it that way?

NEW 10/7: Sure, says the buyer: "Cerner plans to maintain the Malvern location, which has a talented group of associates and a high-quality data center that's complementary" to Kansas City-based Cerner's existing center, spokeswoman Kate O'Neill Rauber tells me.

When Siemens AG bought SMS, one of the Philadelphia area's pioneering info-tech companies, and its 7,600 employees, 3,850 of them at its Great Valley headquarters off US 202 near Malvern, back in 2000, the German tech giant paid $2.1 billion for the medical information systems maker, enriching founder R. James Macaleer's family to the tune of $70 million. By the time Cerner, of Kansas City, agreed to buy Siemens Health in August, 14 years later, the price had dropped to $1.3 billion. The deal includes somewhere between 5,000-6,000 Siemens "associates," plus "the buildings at the Malvern campus," Siemens spokeswoman Kelly Bocich told me.

In a conference call with investors back when the deal was announced, Cerner CFO Marc G. Naughton suggested the change in ownership means a change in the acquired group's corporate expenses (revised): There is "significant overhead coming from their parent company that isn't really reflective of any real work that got done," he told investors. "So there are some things that we can cut out very quickly to increase their profitability," such as "just centralizing some of the administrative functions." 

Of the $175 milion in yearly savings and "synergies" Cerner expects from Siemens Health Services, Naughton added, "a lot of that is from very low-hanging fruit. I will personally be disappointed if we don't exceed the numbers that we presented today."

Why, an analyst asked, did Siemens want to sell? Naugton said owner Siemens AG "Is in a period of re-evaluating things that they're good at and the things they want to focus on." Plus, prices are up lately, he added. And, "they have a very large business in the diagnostic and therapeutic equipment and technology area, and they need these clients to continue to hold them in high regard," which Cerner has pledged to ensure.

And that's the good news, maybe: "We are going to maintain some significant areas of Siemens, let them run their clients, let them continue serving their clients, delivering a high quality experience," Naughton concluded.  Though Cerner's own Dick Flanigan and Farrell Sanders will be joining the Siemens Health management team, joining Malvern veterans "to keep those assets running."