VA signs $10B deal with Cerner

Acting VA Secretary Robert Wilkie signed the deal naming Cerner as the sole-source software provider on the agency's health record modernization effort.

health data (Supphachai Salaeman/

The Department of Veterans Affairs is finally in business on its plan to replace its homegrown electronic health records system.

Almost a year after the department announced its plan to sole-source the modernization effort to Cerner, which is the software undergirding the Pentagon's new system, acting VA Secretary Robert Wilkie signed a $10 billion contract on May 17.

"This is one of the largest IT contracts in the federal government, with a ceiling of $10 billion over 10 years," Wilkie said in a statement. "And with a contract of that size, you can understand why former Secretary [David] Shulkin and I took some extra time to do our due diligence and make sure the contract does what the President wanted."

The VA is the largest integrated health care system in the United States, covering more than nine million beneficiaries across more than 1,200 sites, including 170 large medical centers. The effort to replace VA's Vista system with a commercial solution will be the largest such effort of its kind to date.

Former VA Secretary Shulkin announced plans to move to Cerner in June 2017. Eventually, the VA sought and obtained from Congress a separate budget line outside of the Office of Information and Technology to implement the modernization effort.

The VA already has $782 million in FY 2018 money, about $500 million of which is going to Cerner for a down payment on the system, according to former VA officials familiar with the contract.

Congress is expected to supply $1.4 billion in FY 2019 to support the project.

The $10 billion to Cerner is only part of the story. Infrastructure updates and program management are expected to add another $6 billion to the project's total cost.

The decision comes as the MHS Genesis system, being implemented by the Department of Defense at three sites in the Pacific Northwest, is on pause while officials cope with problems that have rendered the system unfit for use, according to an internal oversight report.

Wilkie alluded to ongoing problems with the system in a statement, noting that "VA and DoD are collaborating closely to ensure lessons learned at DoD sites will be implemented in future deployments at DoD as well as VA."

While VA and DOD won't use exactly the same system, they plan to share Cerner's data center infrastructure and the same basic software architecture. At a November 2017 appropriations hearing, program manager John Windom told lawmakers the two systems would be "100 percent interoperable."

The signing of the Cerner contract was delayed at multiple points for different reasons. The first deadlines that slipped in late 2017 were in part due to reluctance on the part of appropriators to reprogram funds for the deal, multiple VA sources told FCW.

Later there were objections from the White House and others who wanted more detail on the level of interoperability between the proposed Cerner system and other commercial systems – something that is increasingly important as veterans seek care outside the VA system through the Choice program.

According to Politico, Dr. Bruce Mostowitz, a Palm Beach, Fla., internist and a Mar-a-Lago denizen, discussed the issue with President Trump and Shulkin on multiple occasions. That intercession led a group of Democrats in the House and Senate to seek answers from VA on who was consulting on the health record modernization and why delays were continuing.

Lawmakers on both sides of the aisle have long been frustrated with the inability of the Pentagon and VA to field interoperable electronic medical records systems. An effort at a joint procurement under the Obama administration was abandoned in 2011 as too costly. Lawmakers were also almost uniformly unimpressed by the stopgap "Joint Legacy Viewer" read-only interface between VA's Vista and the DOD's multiple legacy systems.

Rep. Phil Roe (R-Tenn.), a physician and chairman of the House Veterans Affairs Committee, was pleased with the news of the VA-Cerner deal.

"This transition should be done right, not fast, and I’m pleased the department took extra time to review the contract before moving forward," Roe said. "Oversight of implementation and spending will be critical as this process continues."

Sen. Jon Tester (D-Mont.), the ranking member of the Senate Veterans Affairs committee, is pushing legislation to make sure the transition to the new medical record system is transparent and effective.

"This is the largest electronic health record transformation in the history of American medicine, and the VA has no room for error," Tester said in a statement. "I will hold the VA accountable to make sure that they get this right."

The Vista system being replaced will continue to operate until the migration to the Cerner system is complete, a process that could take as long as a decade. The VA plans to begin the transformation in its Pacific Northwest region, to take advantage of geographic synergies with Cerner's contractor force.

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