Microsoft Acquires Nuance – Great for Healthcare

April 14, 2021

 – Episode #

72

Is this good for healthcare.  Let’s see.

1. The number of vendors I have to deal with is one less.
2. Nuance has the money to develop clinical vocabularies quicker.
3. Microsoft adds a power set of capabilities to it’s cloud offerings
4. Both are already good partners in healthcare and understand the business.

Only downside I can come up with is that the annual Microsoft Licensing costs are going up.

Perhaps I’m not seeing the whole picture, but I really like what I am seeing.

What is your take?

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Today in health, it, the story is Microsoft and nuance. And my take on that. My name is bill Russell. I’m a former CIO for a 16 hospital system and creator of this week in health. It a channel dedicated to keeping health it staff current. And engaged. Today, no sponsor. Just want to make you aware of a service we offer. We do.

Three full length shows on this week and held it every week. These are interviews, new shows, even a solution showcase from time to time. You may not have time to listen to every episode or every day, but we develop clip notes to keep you informed. This is an email that goes out 24 hours after each show airs on the channel where the summary bullet points and two to four short video clips.

You can subscribe on our website this week. health.com. Just click on the subscribe button. Or have your team subscribe as well and get the conversation started on the right foot. All right. Here’s today’s story. And I’m actually gonna pull from two different articles. The first article I’m going to pull from.

Is CNBC Microsoft buys nuance communications for 16 billion. Here’s the three bullet points. Obviously the first is, the 16 billion number. Microsoft will buy nuance for $56. A share about 23% premium over nuances. Closing price Friday and

nuance technologies will be used in Microsoft health care cloud products. . I think there’s only really two paragraphs from this. I want to cover. They talk a lot about the business implications of this deal and where Microsoft is going from a growth strategy. But from a nuance standpoint and relevant to healthcare nuance would be aligned with part of Microsoft business that serves businesses and governments.

Nuanced derives revenue from selling tools for recognizing and transcribing speech in doctor’s visits, customer service calls and voicemails. And it’s announcement Monday. Microsoft said nuance technology will be used to augment Microsoft cloud product for healthcare, which were launched last year.

The company reported $7 million in net income on about 346 million in revenue in the fourth quarter of 2020. With revenue declining 4% on an annualized basis. Nuance was founded. In 1992 and had 7,100 employees as of September, 2020. The second article I’m going to take has a little bit more of a healthcare bend on it. Microsoft makes big bet on healthcare, AI technology with nuance. This was actually a Bloomberg article written a little bit before the deal was finalized. So some of the language might sound a little off, but.

Let me just give you a couple paragraphs out of this. Microsoft has been trying to make inroads into the healthcare sector, selling more cloud software to hospitals and doctors. And by the way, that is the whole. Reason that Microsoft is making this acquisition. We’ll get to that in just a moment. It’s been working with nuance for two years on AI software that helps clinicians capture patient discussions and integrate them into electronic health records.

And combining the speech technology companies, products into its teams, chat app for telehealth appointments.

The new ops, the. The L would be a trophy for Redmond said Wedbush analyst Dan Ives, referring to Redmond, Washington based Microsoft.

Nuance is in the midst of an unprecedented strategic turnaround. The last few years under the leadership of CEO, Mark Benjamin, and we believe the company represents a unique asset on the healthcare front for Microsoft under Benjamin nuance has narrowed its focus and separated peripheral businesses such as Seretse Inc the automotive AI unit.

That was spun off two years ago. It also sold off another imaging unit as well. , let’s go down a little bit. As AI software gets better at parsing language and predicting medical needs nuance, and Microsoft may be able to develop technology

that searches for certain words in health records to make better suggestions to doctors for patient care. This can really help Microsoft accelerate the digitization of the healthcare industry, which has lagged other sectors, such as retail and banking said, Anurag Runa, a Bloomberg intelligence, senior analyst.

The biggest near-term benefit that I can see is in the area of tele-health where nuance transcription product is currently being used with Microsoft teams. Last two paragraphs, the new house purchase will compliment efforts in recent years where Microsoft has assigned thousands of employees to its AI work.

And release tools customers can use to build applications that understand and translate speech, recognize images and detect anomalies. The company views AI as a key driver of future sales of cloud services. And I agree with that,

the acquisition may also give Microsoft a boost as it faces fierce competition in the AI space with rivals, such as alphabet, inks, Google, and amazon.com Inc. Also investing heavily in the field. All right. So that’s the story. Microsoft has acquired nuance or they’re in the process of acquiring I’m sure it has some hoops to go through.

What most people don’t realize is that the Microsoft contract often represents the largest single outlay. In most health systems, it budget. The trick for Microsoft is how to add to that number every year. I’ve called Microsoft an arms dealer in the past. And that is what I believe they are. You can trust that Microsoft isn’t going to stand up a healthcare practice. They aren’t going to try to compete with any healthcare organization, but they are going to sell them arms, sell them tools.

The reason I make the distinction of an arms dealer is because they will sell to anyone. They sell the tools you need to be successful and they don’t take sides. You just sign the MSA, write the check and we’re all good. In fairness, this is the best company to partner with. They represent no threat.

Other than the rising licensing costs to your health system. They will give you a great set of tools that is competitive with the big four Amazon, apple, Google, while they are one of the big four Microsoft. And you don’t need , to really look over your shoulder. Once you sign that deal. This is a good move from Microsoft. And I would notch this as a wind for my application rationalization initiative. If you’re trying to simplify your environment, reduce the number of vendors, reduce the number of applications. This is a win for you. Them signing that deal is a win for you.

I have one less vendor. Microsoft will roll this in. It will be folded into their licensing and their tech stack. This is the first one. The second one will come up. When we start to see where Microsoft starts to apply this technology. There are countless opportunities in using voice in healthcare. We’ve covered many of them on this week in health. It there’s patient facing voice provider facing voice with hundreds of use cases yet to be explored. I see this as a big win for healthcare and a big win for Microsoft.

And the last thing to consider is that it was going to take nuance forever to build the clinical dictionaries and. They now have a rich grandfather that just bought them. Who’s going to give them a fair amount of money to build out those clinical dictionaries. And that’s key. That’s key for the accuracy of the.

Transcriptions and it’s key. For the application of it across the broader healthcare landscape so this is a huge win for all of healthcare

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