DOD Selects Cerner Team for Massive EHR Overhaul Contract

July 30, 2015 in News

On Wednesday, the Department of Defense announced that electronic health record vendor Cerner, Leidos, a government systems integrator,  and Accenture Federal have been awarded its EHR modernization contract, FierceEMR reports (Bowman, FierceEMR, 7/29).

Background

In February 2013, DOD and Department of Veterans Affairs officials announced plans to halt a joint integrated EHR, or iEHR system, and instead focus on making their current EHR systems more interoperable.

In August 2014, DOD issued a final solicitation for bids for the Defense Healthcare Management Systems Modernization contract, which was estimated to be worth $11 billion. A team of DOD civilians, military personnel and subject matter and procurement experts evaluated the proposals.

In addition to the Cerner team, other groups competing for the contract included:

  • A team that includes Computer Sciences Corp., a defense contractor and systems integrator, Hewlett Packard, a computer services firm, and EHR developer Allscripts;
  • A team that includes IBM and EHR vendor Epic, which recently unveiled a new advisory group; and
  • A team that includes DSS, General Dynamics Information Technology, Google, MedSphere and PricewaterhouseCoopers (iHealthBeat, 2/24).

Contract Details

The initial two-year contract is worth $4.3 billion. There are two additional three-year option periods and a potential two-year award term, which could bring the contract period to 10 years. In a release, Frank Kendall — undersecretary of defense for acquisition, technology and logistics — said the total contract value is now estimated to be $9 billion.

As part of the contract, the winning group will be responsible for upgrading and managing the health records of more than 9.5 million DOD beneficiaries (Conn, Modern Healthcare, 7/29). DOD officials said the system will be deployed at about 1,000 sites in the U.S. and abroad, including the DOD’s 55 hospitals and more than 600 clinics.

Christopher Miller, the Defense Healthcare Management Systems program executive officer, in a statement, said that the new EHR system will replace up to 50 legacy systems, each of which has its own transition plan (DOD release, 7/29).

Therefore, officials said the system will be implemented over six or seven years. Officials said they will begin deploying and testing the system at eight military facilities in the Pacific Northwest, which are expected to be up and running by the end of 2016 (Modern Healthcare, 7/29).

Reaction

In an emailed statement, athenahealth CEO Jonathan Bush expressed disappointment that DOD did not go with a more open, Internet-based platform. He said, “By partnering with the very same legacy [health IT] system vendors [that] are largely responsible for the current state of disconnected health care, the DOD is making a long slog toward the type of interoperable infrastructure the [Office of the National Coordinator for Health IT] mapped out in its 10-year plan” (athenahealth statement, 7/29).

Micky Tripathi, CEO of the Massachusetts eHealth Collaborative, said, “My biggest worry isn’t that Cerner won’t deliver, it’s that DOD will suck the lifeblood out of the company by running its management ragged with endless overhead and dulling the innovative edge of its development teams.” He added, “There is a tremendous amount of innovation going on in health IT right now. We need a well-performing Cerner in the private sector to keep pushing the innovation frontier” (Tahir et al, “Morning eHealth,” Politico, 7/30).

Todd Cozzens — venture partner and senior adviser at venture capital firm Sequoia Partners — said, “The number one focus of the DOD, the ONC and others should be, not only is this system useful, but can it interoperate” with other vendors’ EHRs. He added that he would not be surprised if the award is appealed (Modern Healthcare, 7/29).

According to “Morning eHealth,” Computer Sciences Corporation, which was on a bidding team with EHR vendor Allscripts, said it would “evaluate its options.” The IBM and Epic bidding team did not comment on the possibility of an appeal.

Meanwhile, John Halamka, CIO at Beth Israel Deaconess, appeared more optimistic, saying, “Cerner is a strong company, which has accelerated its interoperability and cloud hosting efforts over the past few years. Their strategic direction seems well-aligned with DHMSM needs” (“Morning eHealth,” Politico, 7/30).

According to MedCity News, Cerner is unable to comment on the announcement due to a mandatory quiet period that is expected to be lifted on Tuesday ahead of its scheduled earnings announcement for the quarter that ended June 30 (Versel, MedCity News, 7/29).

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