“I’m stunned,” says longtime vendor selection consultant Vince Ciotti of the Defense Department’s pick of Cerner Corp. to be the new electronic health records vendor for the Military Health System.

Ciotti had pegged a 90 percent probability of Epic Systems getting the deal, as the company has consistently beaten Cerner for large delivery system contracts in recent years. Further, a young Epic, through the huge contract it got with Kaiser Permanente more than a decade ago, has shown the ability to significantly ramp up and do a massive job. “Frankly, I think Epic would have been a wiser choice for us taxpayers.”

But it is the Cerner team led by government contractor and IT implementer Leidos as well as consultancy Accenture and dental software vendor Henry Schein that took the prize over the teams of IBM, Epic and Impact Advisors; and Hewlett-Packard, Computer Sciences Corp. and Allscripts.

Also See: Leidos, Cerner Team Wins Coveted DoD EHR Contract

Leidos, in its current status and in a previous life as part of SAIC, has extensive experience with current and previous defense EHR systems. With the Defense Department, politics and lobbying win contracts and Leidos knows how to lobby the government, Ciotti notes. Importantly, Cerner carried its weight with far superior sales and marketing teams than Epic, he adds.

Now comes the heavy work for the winners, and not just Cerner, as Leidos and Accenture have a lot of work ahead of them and could well make more money off the project than Cerner, Ciotti believes. Ciotti doesn’t want to come off as dumping on Cerner; it’s an impressive organization and certainly a top player in healthcare information technology. But the company has big challenges ahead.

Cerner, he notes, already is busy integrating its Siemens acquisition, working with about 750 Siemens prospects to move them to Cerner systems and might get 350. Add the DoD contract and it will be a nightmare getting enough implementation staff, he says. And the company has to ramp up significantly while it also tries to still meet shareholder and investment analyst financial expectations on a quarterly basis as a public company, a worry that privately held Epic doesn’t have.

Steve Lazarus, president of the Boundary Information Group consultancy in Denver, also points to Leidos’ connections in the Defense Department and long experience with DoD EHRs as advantages that other suitors didn’t have. He speculates that Leidos will combine Cerner’s software with Mumps-based interfaces, customize open source software from the Department of Veterans Affairs for eligibility and other ancillary functions, and take advantage of Cerner’s data exchange capabilities to enable Military Health System providers to communicate with outside providers.

Leidos, Lazarus says, “has a track record of leveraging public domain software to win DoD contracts and the track record to implement these things worldwide.”

Cost of the DoD EHR over 18 years—operating in 55 hospitals, more than 600 clinics and in theaters across the globe—originally was pegged at about $11 billion but the current expectation is below $9 billion, according to the Defense Department. The EHR will serve more than 9.5 million beneficiaries and 205,000 providers.

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