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Impact of DoD EHR Modernization Contract on EHR Vendors

By Kyle Murphy, PhD

- Prime contractor Leidos and its partners Cerner and Accenture are the big winners of the DoD Healthcare Management System Modernization (DHMSM) contract — the DoD EHR modernization project — but they are not the only ones to benefit from the award.

DoD EHR modernization contract has good and bad implications for EHR vendors

According to Black Book Managing Partner Doug Brown, the DoD's contract award also has positive implications for EHR vendors not named Epic Systems. Allscripts is one such example.

"The biggest upside will definitely be for Allscripts on the announcement.  Allscripts may have been the underdog in the bid against Cerner and Epic, but Allscripts has the experience of large system clients, complex system implementations, internal resources, and satisfied customers," Brown maintains. "Most importantly, Allscripts also has earned a reputation as an interoperability leader and acquired strategic companies to support population health and revenue cycle management."

Moreover, Cerner's preoccupation with the DoD EHR modernization and Epic's need to rebound from the loss should give Allscripts a leg up in competing with the two EHR vendors on future contracts,

"The spoils of Cerner being consumed with DoD, and Epic losing credibility with the contract loss will undoubtedly go to Allscripts," claims Brown. "That would put Allscripts on the radar screen of some large hospitals and multispecialty physician clinics in current replacement mode."

Brown also sees opportunity for McKesson as a result of the federal agency's decision. "McKesson also stands to gain share back, as it emerges back on the scene from recent EHR system make-overs for its efforts that augment EHR much like Allscripts in interoperability, population health and revenue cycle," he adds.

As for the negative impact of the DHMSM award, Brown foresees difficulties for EHR vendors not aligned with the CommonWell Health Alliance:

Any EHR vendor or support system that does not participate in the CommonWell alliance is likely going to be assessed as outside the innovative interoperability ramp up and lack opportunities in the replacement market.  Epic has rejected the invitation of CommonWell which consequently decreased the satisfaction scores of its own Epic users in Black Book polls over the past 2 years. 

In fact, all the Cerner’s alliance partners in the CommonWell consortium intensely focused on interoperability all stand to gain inclusion in sales opportunities dominating by Epic and Cerner of late.  This includes the current decision making statuses of many Siemens and NextGen clients struggling with vendor replacement choices.

The cross-vendor CommonWell initiative, in which only 24% of providers put only little stock in a year ago, has experienced an upsurge in credibility and reliability as 84% of CommonWell members report last month success rates with highly complex data sharing overall, and 94% report success with common interfaces.  Epic Systems and NextGen faired far less (below 50%) successful record transactions across different platforms.

As for the rationale behind the DoD awarding the EHR modernization project to Leidos et al., Brown argues that it all came down to interoperability. "Cerner’s demonstration of wide-ranging provider interoperability on multiple, different platforms were the huge differentiator over Epic’s garden-walled methodology to system user data sharing," he states.

What also didn't help Epic were its customer satisfaction compare to Cerner and its reliance on consultants for large-scale EHR implementations.

"Cerner is known to their new clients as dedicated their best minds and internal staff into complex implementations, so report clients, with firm control of how Cerner orchestrates their bigger projects. Epic have also failed to convince the provider community outside full Epic regional networks that wide-spread connectivity is achievable," says Brown.

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