Electronic Health Records

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Leidos, Cerner Chiefs Address DoD EHR Modernization Project

By Kyle Murphy, PhD

- In their comments since winning the Department of Defense (DoD) EHR modernization contract, Leidos and Cerner have celebrated the Defense Healthcare Management System Modernization (DHMSM) award as a confirmation of each company's progress in developing innovative and integrated health IT.

Leidos and Cerner comment on the DoD EHR modernization project

"We are honored, humbled, and excited to be a part of the team that won what we believe was the most objective and comprehensive evaluation of technology platforms and solutions ever conducted," Cerner President Zane Burke said during a company's earnings call Tuesday.

"We now have the opportunity for Cerner’s suite of integrated solutions to replace the DoD’s legacy health IT system in its 55 hospitals and more than 350 clinics worldwide, as well as in ships, submarines and other locations in the theater of military operations," Burke added.

Cerner's was likewise adamant that the DoD EHR modernization project would not interfere with its work with other clients. "We believe this is a positive development for our clients, and they should have confidence that Cerner will continue to execute to meet all of our current and future commitments," Burke stated.

Much of that has to do with Cerner working as part of project team led by Leidos.

"The Partnership is fully prepared to meet the staffing requirements of DHMSM, and our globally deployed team stands ready to support the DoD and the DHMSM Mission," Burke maintained. " We’re pleased to be partners with Leidos, Accenture, Henry Schein and a number of small business partners in making this important transition for our military health system and its 9.6 million beneficiaries. Intermountain Healthcare is also a strategic partner and is providing clinical governance of solutions and workflow."

As Burke noted in his comments, Cerner is the core EHR supplier for the DoD EHR modernization project. However, the project is truly led by Leidos whose Chairman and CEO also made comments on the significance of the DHMSM award for his company:

The recent decision by the Department of Defense to award the Defense Healthcare Management System Modernization (DHMSM) contract to the team led by Leidos is an important milestone, and a recognition of the world-class health IT capabilities of the Company. We look forward to continuing our long and distinguished history of supporting the Military Health System and enabling the DoD to execute their missions. I remain confident that our focus on serving the needs of our customers and increasing value to our shareholders will help us achieve even greater success.

Although Cerner did not comment on the portion of the DHMSM award the EHR company would be receiving, it did clarify where the $9-billion figure that emerged last week came from:

As many of you saw in the announcement, Leidos was awarded a contract for $4.3 billion over 10 years, consisting of a 2-year initial ordering period, two 3-year option periods, and another 2-year option period.  We are not able to comment on Cerner’s portion of this, but note that we do not expect this to have a material impact on bookings, revenue, or earnings in the near term since the project will have several phases and will start with a small initial rollout.  I know many of you also saw an $11 billion figure cited in regard to the contract before it was announced.  As noted in the DoD’s press release this estimate is now approximately $9 billion and represents the total estimated program costs over 18 years, not the value of the contract awarded.

According to Black Book Managing Partner Doug Brown, Cerner's win over competitors Epic Systems and Allscripts had much to do with the former's progress with 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 stated in comments emailed to EHRIntelligence.com.

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