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Mixed Feelings Pour in Over Cerner/DoD EHR Deal

July 30, 2015
by Rajiv Leventhal and Mark Hagland
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Aspen Advisors’ Turisco: Bidding was another “Cerner-Epic bake-off”

The health IT industry was full of mixed feelings as it began to digest the news that the Cerner Corp./Leidos-led team was granted the U.S. Department of Defense (DoD) electronic health record (EHR) contract.

Late in the afternoon on the East Coast on Wednesday, July 29, the DoD announced that the massive Department of Defense Healthcare Management Systems Modernization (DHMSM) contract—worth roughly $9 billion—to upgrade the military’s EHR system would be granted to a team of Cerner,  which is part of the Leidos Partnership for Defense Health, an alliance that includes Leidos and Accenture, a global IT and management consulting company.

Epic Systems and Allscripts Healthcare Solutions were the other two vendor finalists for the contract, each also with its own team aimed to upgrade the military’s EHR system: Allscripts with Computer Sciences Corporation (CSC) and Hewlett-Packard (HP); and Epic with IBM Corp, Impact Advisors and others.

In regards to the impact of the contract, Fran Turisco, a consultant with Aspen Advisors, Part of Chicago-based The Chartis Group, says, “This deal means continued competition between the two biggest EHR vendors. Most deals now involve Cerner-Epic ‘bake-offs. In this case, Cerner has a strong suite of solutions, including OR [operating room] and anesthesia solutions, plus the ‘Cerner room’ and the ‘Cerner cabinet.’ Having that array of solutions might have played into the DoD’s decision here.”

In other words, the Boston-based Turisco says, this result in the DoD’s contracting means the two largest EHR vendors will continue to battle it out for the bulk of face-offs in EHR selections. What’s more, she says, “This also means that Cerner will be able to bring more resources, including human resources, to future situations like this.”

Also showing optimism was David Kibbe, M.D., CEO of DirectTrust, the healthcare industry alliance created by and for participants in the Direct exchange network. Kibbe, who is also a senior advisor to the Alliance for eHealth Innovation, said in a statement, “Cerner has been a very strong proponent of open, standards-based approaches to EHR interoperability, and is a major participant in the DirectTrust network that links over 40,000 healthcare organizations and nearly a million individual private sector healthcare professionals via Direct exchange. That DirectTrust's network availability is of significant interest to federal agencies involved in healthcare, including the Veterans’ Administration, Indian Health Service, U.S. Postal Service, and Centers for Medicare and Medicaid Services, in addition to the DoD, is no secret.”

However, in an emailed statement from Watertown, Mass.-based  vendor athenahealth,  which was originally teamed with Cerner to compete for the bid, but then dropped out when Cerner bought Siemens last year, Dan Haley, the company’s vice president of government affairs, said, “The DoD cannot achieve 21st century results with 20th century technology. Unfortunately, this award will set the country back in our collective quest to achieve in healthcare the same level of information fluidity that we take for granted everywhere else in the information economy.”

Further, athenahealth’s CEO Jonathan Bush was also skeptical of the deal in his prepared statement. He said, “A year ago when the DOD opened its competition for its $11B digital health contract, it spurred national dialogue on how best to connect care across the U.S. As nearly every American can attest, healthcare has struggled more than any other industry to move information to and from where it ought to go. The opportunity that came with the DOD contract was to build a national health information network that could ensure patients’ health information could follow them no matter where they went: a VA hospital, a tent in a warzone, a retail clinic, or standing in line for coffee while checking a prescription via a mobile patient portal."

Bush went on to say, "Given the DOD’s decision, I’m not optimistic we’ll see this. Healthcare, just like every other industry, could operate better and more effectively if backed by more open, Internet-based platforms that are tied to results vs. traditional, pre-Internet software. By partnering with the very same legacy HIT system vendors who 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 ONC mapped out in its ten-year plan. I hope I’m wrong.”