New reports have Amazon.com Inc. via its Amazon Web Services unit, moving further into digital healthcare with a new partnership with electronic health records vendor Cerner Corp.

If that is indeed the case the move makes lots of sense and opens new potential for both companies, says R.W. Baird senior research analyst Matthew Gilmore who follows healthcare stocks.

CNBC has reported that next week Amazon Web Services, the online retailer’s cloud computing arm, will announce a major new alliance with Cerner at its annual user group meeting. Reportedly, the two companies will announce a business development and technology integration deal whereby Amazon Web Services would provide cloud computing services for HealtheIntent, Cerner’s population health management product series. Amazon and Cerner have yet to talk publicly about the proposed deal.

Population Health Management is the aggregation of patient data from many sources into a single electronic patient record. HealtheIntent is a cloud-based, population health management system that Cerner says can receive data from any electronic health record, existing healthcare information technology system and other data sources, such as pharmacy benefits managers or insurance claims.

Big health systems such as Carolinas HealthCare in Charlotte, NC, are using HealtheIntent to better manage more than 12 million patient records says.

Cerner already utilizes Amazon Web Services for storage services, but it is reportedly set to use AWS for a broader range of cloud computing services to support HealtheIntent. If that is case, Cerner be able to offer better cloud computing services to major hospital clients at time when many are looking to replace outdated legacy systems with cloud-based software.

In return Amazon, via Amazon Web Services, gets broader access to the mainstream health systems and hospital information technology market, says Gilmore. “We believe Cerner’s population health platform, HealtheIntent, already uses Amazon AWS for storage and other services, but the expanded relationship will also leverage AWS’s analytics capabilities and global data,” Gilmore writes in a new research note.

With Amazon reportedly weighing a broader move into healthcare, the deal with Cerner gives the e-commerce giant new ways to sell to hospitals, Gilmore says.

Amazon’s biggest move into healthcare thus far has been through Amazon Web Services, its highly successful business unit that offers other companies and government agencies data storage and computing capacity. Since 2014 Amazon Web Services has provided cloud computing and network support services to Healthcare.gov, the health insurance e-commerce network operated by the Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Services. Under a multiyear contract Amazon Web Services has with the Centers for Medicare and Medicaid Services, Amazon has built several e-commerce programs that have enabled millions of consumers to comparison shop and purchase health insurance on Healthcare.gov. Those tools include building an identity management system, a feature for comparing insurance plans, and a tool to determine eligibility for specific plans based on a consumer’s income and other variables.

Amazon Web Services, which generated revenue of $12.21 billion in 2016, or 9% of Amazon’s total revenue of $135.98 billion, has nearly three dozen publicly named big healthcare clients. They include such health systems as Cleveland Clinic and Intermountain Healthcare, and health insurers such as Oscar Healthcare. For the Cleveland Clinic, Amazon Web Services helped to develop the Healthy Brains Initiative, which gives patients and neurologists a way to enter and analyze information about conditions and activities that affect brain health. For Intermountain, Amazon Web Services worked with oncologists across the U.S. to deliver precision medicine to cancer patients, while Oscar uses AWS to run its insurance platform, customer databases, and analytics program.

But the move with Cerner gives Amazon more direct access to the biggest hospitals and health systems that use Cerner’s electronic health records system. About one-fifth of the U.S. hospital market, about 1,029 organizations, use Cerner health records system.

“Prior press reports indicated Amazon was selectively looking to enter certain healthcare information technology markets via its 1492 project, including electronic health records and as such we are encouraged by this broader partnership between Amazon and Cerner,” Gilmore says. “It’s better to be aligned with Amazon vs. being disrupted.”

Keep up with latest coverage on digital healthcare by signing up for Internet Health Management News today.