I have waited about five days to comment about the success of Cerner and its partners with the DOD EHR contract. This has allowed me to collect my thoughts and review some of the other articles covering the news. I thought that the best analysis I have read was by Joseph Conn of Modern Healthcare (see: Cerner, Leidos and Accenture win massive Defense contract for EHR system). Below are some quotes from his article:
For the better part of a year, Epic has been buffeted by charges from its critics, competitors and various members of Congress about an alleged lack of interoperability of its system....Chris Miller, program executive officer of defense health management systems, the Defense Department office that handled the DHMSM procurement, said the buyers were acutely aware of the data-blocking issue....
Dr. Howard Landa....previously worked in medical informatics for Kaiser Permanente, including during the 2003 through 2007 period when it switched from multiple home-grown EHRs to Epic. The worry then was that Kaiser, with its 36 hospitals, would drain Epic's resources from its other customers. That largely didn't happen. Now, that monkey will be on Cerner's back....
Leidos, formerly the national security, health and engineering business of defense contractor Science Applications International Corp, was spun off from SAIC in 2013. In the late 1980s and early 1990s, SAIC, operating on a $1.1 billion Defense Department contract, created and installed the Composite Health Care System for the military health system. CHCS I, which is still in use, was based on public domain software code provided free by the VA from an early version of what is now the VA's VistA EHR....
Todd Cozzens..., a noted venture capital firm in the information technology industry, said interoperability is a key issue.“The No. 1 focus of the DoD, the ONC and others should be, not only is this system useful, but can it interoperate” with other vendors' EHRs, Cozzens said. “There's so little emphasis on making these systems interoperable,” Cozzens said. “We really failed as an industry to do that.”....
Perhaps in anticipation of good news from the Defense Department, Cerner stock prices jumped nearly 7.2% on the day, closing an hour before the award was announced at $73.40 a share. Miller said the military has more than 50 systems it is planning to replace with the new Cerner installation.
I believe that Cerner has been preoccupied with Wall Street and its quarterly earnings since it went public. The same charge cannot be leveled against Epic which is privately held and generally uninterested in marketing or hyping its product. The company depends largely on referrals and word of mouth. This new contract is certainly good news for Cerner stockholders because the company will now be feeding at the "Uncle Sugar" trough for many years to come. This new relationship with the DOD will push Cerner further down the path of a de facto governmental contractor like its partner Leidos. I can't say that this will necessarily hurt the services and products that Cerner provides to its current hospital clients but I am sure that they are not going to get any better.
As to Epic "failure" to win the contract, I suspect that there were a lot of smiles of relief in Verona when the winner was announced. I think that Epic was competing in the contest because everyone expected it to do so. The Epic culture and emphasis on client control was probably a non-starter for the military brass. Leidos/SAIC contrariwise was a known quantity for them. Epic has almost a lock on the EHR business for the larger and most prestigious U.S. hospitals and success with a DOD contract would have done little to burnish the company image. It will just keep on rolling, closing more deals in the U.S. and beefing up its international set of clients. Here's a quote from another article reinforcing this same idea (see: CIOs 'surprised' at Cerner DoD win):
In addition to partner strength, ...[an EHR expert] believes Cerner likely had the upper hand in terms of sales skills. "Cerner is a selling machine and they do a very good job of selling their product," ...[he noted]. "Epic thinks they are the de facto winner all the time and they don’t know how to sell because they haven’t needed to sell. "But that’s not how the government works. They have a whole process they go through and Epic isn’t geared to deal with that.
One more thing. What's the chance of Cerner/Leidos/Accenture actually succeeding in this huge, global EHR military/VA integration project? I and many informed observers put the chances of success at slim to none. Ross Koppel's quote below accurately reflects my opinion (see: Cerner is part of team that wins huge contract to revamp military’s health records):
Some analysts were skeptical that any of the bidders was up to the task. In the end, the Pentagon had a choice among three finalists who offered fairly mediocre systems for the price, said Ross Koppel, a professor of sociology at the University of Pennsylvania who studies health information technology. “All the systems are stunningly clunky, the interfaces are state of the art 15 years ago, the usability is far inferior to every other system of the modern era, and the lack of interoperability makes a hash of the data,” Koppel said.
So, here's what's I think is going to happen? A year or two from now, Cerner/Leidos/Accenture will announce a huge victory in installing and integrating the Cerner EHR in a large Army hospital and a few free-standing clinics. Then, total "radio silence" for five or six years. Then a DOD spokesperson will announce that the military is unhappy with the EHR contractors who have not lived up to the terms of the contract in addition to being responsible for cost overruns with the cost swelling to, say, $15 billion with little to show for it. This latter news will not receive much media coverage.
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