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Defense Healthcare Management System Modernization Project: Procurement Shaves Costs by 20%

Last week, the US Department of Defense awarded a long-awaited multi-billion dollar contract to Leidos, Cerner and Accenture to provide and implement an off-the shelf EHR system across the Military Health System. The ID/IQ contract has a ceiling of just over $4.33bn. It has a two-year base with two three-year extension options, and a possible two-year award term, making a total period of up to ten years. The Defense Healthcare Management Systems Modernization (DHMSM) procurement has lasted nearly two years and, as is common in large U.S. federal awards, the decision may be contested. The Leidos/Cerner/Accenture team beat IBM/ Epic Systems, and Allscripts/CSC/HP in the final selection.

In what is the largest EHR system project globally to date, the DoD was looking for a COTS system that can be implemented with as little customization as possible.

DoD opted not to use the VA’s open source VistA EHR, maintained by HP (a system that has been adapted for use by the Indian Health Service, also in hospitals in other countries including Finland, Germany and Egypt). The two departments were at one stage considering a single integrated EHR (the iEHR; the projected costs at that time were ~$15bn), but in 2013 the DoD elected instead to go for a separate but interoperable COTS system. Meanwhile the VA is also modernizing VistA.

The new EHR sytem will replace the Armed Forces Health Longitudinal Technology Application (AHLTA), components such as AHLTA-Theater, and he Composite Health Care System (CHCS), which was implemented by Leidos when it was part of SAIC.

DoD wants the new EHR system to also be interoperable with EHR systems used by civilian hospitals and office-based physicians, as over 60% of the medical care provided to the military's 9.6m military personnel (active duty and retired) and their families takes place outside military facilities.

DOD’s selection of a COTS system with minimum modifications has cost benefits as well reduced technical risk: the initial estimate of the TCO of the system was $11bn over its projected 18-year life cycle; that has now reduced to under $9bn.

In what is an ambitious timeframe, DoD is looking to have the software deployed at eight sites in the Pacific Northwest by end 2016 and in around 1,000 sites within six or seven years. There is skills availability in the Cerner platform, so this, at least, should not be a major problem.

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