EHR leaders vying for $11B military contract
Three major developers of electronic health-record systems for hospitals have announced they are in the hunt for one of the biggest contracts in health IT history to provide a replacement EHR for the Defense Department’s vast Military Health System. Two of those announcements came last week.
Cerner Corp. said Thursday that it was teaming up with defense computing contactor Leidos, which was spun off last year from Science Applications International Corp., and systems integrator and consultant Accenture Federal Services for the 10-year military contract estimated to be worth $11 billion. On Tuesday, Computer Sciences Corp., HewlettPackard and Allscripts made their joint bid intentions known.
On June 11, IBM Corp. and Epic Systems Corp. announced they intend to bid on what’s being called the Defense Healthcare Management Systems Modernization project, or DHMSM, pronounced “dim sum.”
The Military Health System includes 56 hospitals and roughly 360 clinics. It serves 9.6 million beneficiaries and uses a hodgepodge of clinical information systems.
“Accenture, Leidos and Cerner are committed to ensuring that the best electronic health-record capability is available for clinicians, and our nation’s military and their families, regardless of where they seek medical care,” Cerner spokeswoman Kate O’Neill Rauber, said in making their announcement.
For the Allscripts consortium, Paul Black, president and CEO of Allscripts, said, “We are very pleased to partner with CSC and HP, organizations that share our commitment to innovation, interoperability and connectivity, and our dedication to improve the quality of patient care.”
Since January, the Defense Department has issued three formal draft requests for proposals though it has not yet solicited actual bids. The military hopes through the process to provide “early and frequent exposure to
“We’re going to be the lead contractor and system integrator and pursue the DHMSM contract.” DR. ROBERT WAH, CHIEF MEDICAL OFFICER FALLS CHURCH, VA.-BASED CSC
industry of the government’s evolving DHMSM requirements,” according to a June 9 cover letter to healthcare industry “partners” by U.S. Navy Capt. John Windom, the project manager. The project is overseen by the Navy’s Space and Naval Warfare Systems Command.
Windom’s letter said the third draft RFP “substantially defines the government’s anticipated requirements” that will be conveyed in the final solicitation for proposals.
Dr. Robert Wah, chief medical officer for Falls Church, Va.-based CSC, said he expects the final RFP to be issued soon, with a winner selected either late this year or early in 2015. “We’re been trying to sort out what the government wants and see if we’re a right fit,” Wah said. “We went out to the rest of industry and did our due diligence to find the best partners to form the best team.”
Hewlett-Packard already has extensive experience with the Defense Department, including a current contract to run the military’s Defense Enrollment Eligibility Reporting System, Wah said. It interfaces with the Military Health System’s clinical data repository, providing healthcare providers with military members’ immunization data, for example. The military’s Armed Forces Health Longitudinal Technology Application, one of its two main EHR systems to be replaced under the proposed new contract, also runs on an HP Superdome server, Wah said.
Allscripts has a “very comprehensive, integrated electronic health record,” Wah said. “What we liked about them is they have an open architecture,” which fits with Defense’s stated desire for a system with flexibility to meet its future needs.
Allscripts has its EHR system installed at the National Institutes of Health research hospital in Bethesda, Md., as well as at several large U.S. healthcare systems including the Pittsburgh-based UPMC system and Dallas-based Baylor Scott & White Health.
Wah said CSC also is working with Allscripts in Australia, where CSC has a contract deploying outpatient records for that country’s defense agency. Allscripts also is selling inpatient and outpatient systems to Australia’s national healthcare system.
In January, the Defense Department released a draft request for proposals for a new EHR system that would also be interoperable with VistA, the system used within the Veterans Health Administration.
Former VA Secretary Eric Shinseki had said the agency would compete for the EHR contract, and interoperability between the two departments would be a key outcome even if the VA didn’t win the bid.
Defense Secretary Chuck Hagel said in May that a bidding process that includes commercial contractors “is the optimal way to ensure we select the best value solutions for DOD,” essentially nixing an in-house solution.
The size of the military contract will likely move the market for the publicly traded EHR developers in the hunt, Cerner and Allscripts, with Allscripts getting the bigger boost due to its relatively smaller size, said Anthony Vendetti, director of research for Maxim Group, a New York-based investment bank.
“It’s huge,” he said. “I’m sure the Defense Department will drive a hard bargain, so it won’t be as lucrative as some of their other contracts.” But there’s more than money at stake. An MHS contract “adds prestige and helps (vendors) win other deals. So there are a lot of indirect benefits.”