Cerner, Leidos, and Accenture Win DoD EHR Project – $4.3 Billion

All the news at the end of the day yesterday was around Cerner (and their major partners Leidos, Accenture) winning the DoD EHR project. We’d been told the decision would come by the end of the month and you knew a decision was close once the major news organizations started writing about what a waste the DoD EHR project will be before they’d even named the winner. That’s called priming the pump. Of course, the critics make some good points about the DoD EHR project dealing with today instead of the future, and they also suggested that “We’re going to make Epic or Cerner the Standard Oil of health IT. It will become a monopoly at a time when we need to be moving to solutions that allow everyone to participate.”

I guess now that we know that Cerner has won the DoD contract, does that make them the Standard Oil of Health IT?

What we do know is that Cerner, Leidos, and Accenture were awarded the $4,336,822,777 (Our government’s so precise they got a 10 year project down to the dollar?) EHR contract with it projected to be around $9 billion over the life of the 10 year contract. That’s massive by any terms. It’s also much less than the projected $11 billion that was previously discussed. I guess competition for the DoD EHR contract brought the price down? Although, how often does the government project the costs for a project and then they balloon over the life of the project. According to Healthcare IT News, they’ll be working on bringing their first sites live in the Pacific Northwest by the end of 2016 and 1000 sites by 2022.

A lot of people have been commenting how this is a big win for Cerner and a big loss for Epic. Of course, I wrote a little over a year ago that the best thing for Epic might be to NOT win the DoD EHR contract. You can be sure that many hospital systems won’t be selecting Cerner now that they’re going to be tied up with the massive DoD EHR contract. Who does that leave? In most cases, that will leave Epic. I can’t help but wonder how many Soarian users will now decide to go to Epic instead of Cerner as well because of the Cerner win. Cerner should start working on this potential perception problem.

You can imagine the celebrations happening at the companies that won this contract. HIStalk posted a great image that shows all the partners that will be involved in the bid:
DoD EHR Partners

While they may be celebrating the contract now, it reminds me of startup companies who do big celebrations when they raise a round of funding. Those celebrations are premature since it’s really the start of all the hard work to come.

I personally lean more towards G Gordon Liddie’s comment on the HIStalk post on this subject:

Cerner will do as good a job as Epic would have done…which won’t be great. The federal government can’t pull off something like this.

I think this shares many people’s fears of a project this size. Others might suggest, if the government can’t roll out an insurance exchange website without major issues, how are they going to make an EHR roll out which is much more complex a success. I’m sure Cerner, Leidos, and Accenture will be thinking about this every day for the next 5-10 years.

Other DoD EHR Coverage:
Healthcare IT News
nextGov
HIStalk
MedCityNews

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

6 Comments

  • It is a shame that the DoD and could not see a way to use the VA’s Vista system. Seems very dumb, to me, to miss the opportunity for the support of our Military to be using the same systems for active duty versus veteran status.

    The work to do the switch over would still be hard for the DoD, but the costs, due to the Open Source nature of VistA, now really getting momentum via the OSEHRA project, would have been substantially less than the, surely, understated $9 billion

  • On the bright side this could be an opportunity for Cerner to lead the EHR industry into an eco-system that delivers true innovation. Perhaps something along the lines of supporting an App store concept. I just think that we have a better chance to see out of the box thinking from Cerner then we would have from Epic. Hope springs eternal.

  • John –

    While I appreciate your blogs, I really wish you would do more homework on Cerner as a whole. To me, it is pretty clear that you reside in Epic’s corner more times than not and fail to acknowledge what Cerner has accomplished.

    First, many people very close to this decision, have already stated that Leidos will be owning the majority of the consulting resources while Cerner may only be receiving 10% of the total deal (meaning about $400M over 10 years). While that is a nice chunk of cash for Cerner, it is not where near some of their larger deals they have in place. Being that Leidos is owning the majority of the resources, current and future Cerner clients will not have to worry about Cerner’s inability to service them. Cerner will be able to continue as is and in fact, it is hospital systems that use Leidos as a contractor that need to worry. Leidos will have the resourcing constraints, not Cerner.

    Second, as for your previous articles consistently touting Epic’s Big Clients (Mayo, Cleveland, UMASS and Kaiser) it is easy to always pick the name brands, that is what tourists do when they look for somewhere to eat on vacation. However, those that really study and know the industry would know that Cerner has clients just as big (if not bigger) such as UAB, Jackson Memorial, Hermann Memorial as well as being the EMR vendor of choice for IDN”s just a big as Kaiser like Tenet, Banner, Dignity, Advocate, Adventist, IASIS, etc….

    So, while you are entitled to your opinion, as anyone is, there is No perception problem with Cerner, there is only people who fail to understand and study the industry that do a disservice to the community.

  • Anthony,
    I don’t reside in anyone’s corner, but if I were going to choose a corner I’d probably choose Epic over Cerner. I am impressed with the business Epic has created, but I like Cerner’s approach to things better (generally). So, I guess you read my bias wrong. Maybe you were biased by your own bias?

    Anyway, thanks for the extra details on the deal. I do think you kind of illustrate my point though. In one breathe you say it won’t be a problem and then you say that people will fail to understand that it won’t be a problem for Cerner. If they don’t understand that it won’t be an issue for Cerner then that’s called a perception problem.

    My point being, we could certainly argue about whether the DoD EHR contract will be a distraction for Cerner and whether organizations should worry about them not getting attention because Cerner’s busy with the DoD EHR contract, but I don’t think you can argue that there’s not a perception problem that Cerner will have to address.

    Could I help them solve this perception problem? Maybe, but I’m not totally convinced it won’t be a distraction for Cerner. I’m open to being swayed either way, but I know these government contracts are brutal.

  • For 4 Billion in our tax dollars they should build a NATIONAL EHR that all Doctors can use for Free, and then have the DOD and any one else use it as needed. Only costs is for Implementation, Customization/Integration and Training.

    Another example of Washington getting it wrong. Look at Meaningful Use, all this money spent and still not HIE National Level or working EHR for free from Government.

    This is a easier better direction then projects like this. But this is Washington.

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