EHR lead­ers vy­ing for $11B mil­i­tary con­tract

Modern Healthcare - - NEWS - By Joseph Conn

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.”

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