Cost of VA’s EHR modernization program grows by $350M

Additional funds are needed to cover staff salaries over 10 years for agency employees supporting Cerner implementation.

The Department of Veterans Affairs has added $350 million to its cost estimates for the VA’s electronic health record modernization program—an increase that isn’t sitting well with members of Congress.

According to the latest VA data provided to Congress, the total cost to implement a new Cerner EHR system over 10 years will now exceed $16.1 billion—up from $15.8 billion—of which, the agency’s contract with the health IT vendor remains valued at $10 billion.

John Windom, executive director of the VA’s Office of EHR Modernization, told lawmakers on Wednesday that the additional $350 million now included in the latest agency program estimates are budgeted to cover staff salaries for VA employees over a decade.

“When we originally briefed you on that 10-year lifecycle cost estimate, we in no way included the VA government employee cost—we made that clear with the asterisk noted in our original estimates,” testified Windom.

However, Rep. Jim Banks (R-Ind.), chairman of the House Subcommittee on Technology Modernization, created this summer to provide oversight of the agency’s rollout of the Cerner Millennium system, expressed his displeasure that the costs of the EHR program have “already gone up before any real work begins.”

Banks said at Wednesday’s House subcommittee hearing, a 180-day review of the VA’s EHR modernization program, that he found it “hard to believe that such a basic part of running the program—government salaries—could have been overlooked.”

He added that the $350 million in cost growth for the program is “an enormous amount of money,” which Banks estimated would go to pay the salaries of 2,000 full-time VA employees to support the EHR modernization initiative.

“What we have recently come back to you with are what we think are some very reasonable numbers with regard to program employee requirements,” responded Windom. “We have to have highly qualified subject matter experts to grade the implementation efforts of Cerner. Those people in the industry cost money.”

Banks also questioned a proposed $583 million increase for contractor program management support services from Booz Allen Hamilton as part of the VA’s EHR modernization program.

“I’m still struggling with the budget explanation,” he added. “We have the bottom line going up. It seems to be driven by intangibles and costs that come into play years from now. We already have the cost estimate going in the wrong direction and fuzzy explanations as to why. My colleagues and I need and demand better answers, so please expect a document request for the financial records and basis of these estimates.”

However, Windom justified the expense as being necessary for the creation of 18 executive councils, workflow management and development processes, as well as a “satellite command activity” in the Pacific Northwest to support the agency’s initial Cerner rollout.

Banks noted that the VA has “formed councils of healthcare providers to vet the Cerner EHR and its workflows” and that the health IT vendor “has begun travelling to the initial implementation sites in Spokane and Seattle, and has assessed their readiness.”

The VA’s planned acquisition calls for aligning the deployment and implementation of its Cerner system with the Department of Defense’s ongoing rollout of its own system—called MHS GENESIS, which so far has been deployed at four initial operating capability sites in the Pacific Northwest.

Also See: DoD, VA pledge to better align plans to create single EHR

Cerner has studied the suitability of DoD’s MHS GENESIS as the “baseline for VA,” according to Banks, who added that the agency has “begun infrastructure upgrades at the first medical centers—at some point next year, implementation will begin in earnest in Spokane and Seattle.” He revealed that “nearly all of the computers in Spokane and Seattle are reportedly incompatible with Cerner and are being replaced.”

Nonetheless, Windom assured members of the House subcommittee that the VA’s multi-year EHR implementation strategy will “evolve as technology advances” and that the agency will identify problems at initial operating capability sites and fix them before deploying to additional IOC sites.

“By learning from the DoD, VA is able to proactively address challenges and further reduce potential risk at VA’s IOC sites,” added Windom.

Travis Dalton, president of Cerner Government Services, testified during Wednesday’s hearing that “hard lessons” were learned from the system implementation at DoD’s four initial operating capability sites in the Pacific Northwest. Earlier this year, a report from the DoD director of operational test and evaluation found that Cerner’s EHR was “neither operationally effective nor operationally suitable.”

Dalton told lawmakers that with the VA EHR modernization program Cerner is “doing a lot of things differently,” including engaging with the agency’s initial operating capability sites “early and often” in a way that the vendor did not similarly approach IOC sites for MHS GENESIS.

“We’re doing more workshops upfront,” added Dalton. “We’re doing more of an iterative process where we’re getting regular design review, and we’re making sure that it’s understood what those decisions are that are being made.”

While Banks said the structure of the VA’s EHR plans is mostly in place, he warned that there are “an enormous number of dots to connect,” and “high-level organizational questions are still not settled.” In particular, Banks pointed out that the “workflow councils have a series of meetings—spanning much of next year—in which to hash out how the system should be configured.”

“Again and again, we turn to a basic question like how the VA system will be situated with respect to MHS GENESIS and how the clinical standardization is going to proceed,” remarked Phil Roe, MD (R-Tenn.), chairman of the House Veterans’ Affairs Committee. “I’m a little uncomfortable about that. Ideally those questions would have been answered first. That being said, as long as they are thoroughly and transparently answered before Cerner starts installing the EHR in Seattle and Spokane, the situation should be manageable.”

Overall, the VA has more than 1,200 distinct decisions to make, “often necessitating coordination with DoD,” according to Banks. Although the agency “has outlined the program, identified the next steps, and generally called out the dependencies and risk,” he argued that the VA’s detailed plans and schedules must be finalized. “Only then will we truly know what to expect and what VA has bought.”

Windom said that when completed the VA EHR modernization will “provide veterans with access to a complete medical record” by adopting the same Cerner platform as DoD, “allowing patient data to reside in a single hosting site using a single common system.”

Banks emphasized the importance of achieving full VA-DoD EHR interoperability. But, he said that just as important is figuring out the interoperable electronic exchange of health information with community healthcare providers in the private sector.

“Community provider interoperability has always been the elephant in the room,” Banks said. “VA-DoD interoperability is very important but VA is much farther behind in exchanging records with its community partners. There are many helpful tools, like health information exchanges, but no out-of-the-box EHR system completely solves this problem.”

“Community interoperability is a very real problem,and, for $16 billion, VA had better solve it,” he added.

However, VA’s Windom insisted that “the HIEs, the CommonWell platform, the Carequality platform will allow that seamless exchange of information.” Likewise, Cerner’s Dalton told lawmakers that “it’s technically possible and feasible—we’re going to use open APIs, FHIR-based integration, we’re committed to that contractually.”

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