Siemens buyer gets huge contract

Cerner Corp., which this year bought Malvern's Siemens Health Services for $1.3 billion, has snagged a coveted multibillion-dollar contract to overhaul the U.S. military's electronic health records, the Pentagon announced Wednesday.

The contract is a huge boost for Cerner, based in Kansas City, Mo., one of the top health-information technology firms in the country.

Cerner partnered with defense technology contractor Leidos, Accenture Federal Services, and Intermountain Healthcare in its bid for the $4.3 billion, 10-year defense contract. It beat out a team led by rival Epic, a Wisconsin-based health IT firm.

Cerner and its partners now will be responsible for upgrading the disparate digital medical records of 9.5 million active-duty service members and their families, as well as some veterans, retirees, survivors, and members of the National Guard and Reserve forces and their dependents.

The overhaul will affect 56 hospitals and hundreds of medical and dental clinics in 16 countries.

Cerner declined to comment Wednesday, referring reporters to a statement by Leidos.

"Our team stands ready to lean forward with the DoD [Department of Defense] to implement a world-class electronic health records system," the statement said.

The Defense Healthcare Management System Modernization contract, or DHMSM for short, is known as "dim sum" to industry insiders. About $11 billion is budgeted for the project over the next 18 years, but the military predicts the total will end up closer to $9 billion.

The Government Accountability Office, a congressional watchdog, has put the Pentagon's health records modernization project on its list of high-risk government initiatives, noting that federal agencies have wasted billions on failed IT investments over the years.

"This is a really big deal in its size and its complexity, and so I can imagine that there's a giant celebration going on over at Cerner, but I also think it's an extremely challenging implementation with a lot of visibility," said Jeff Smith, vice president of public policy at the American Medical Informatics Association.

"Everybody wants to do right by servicemen and women, and that's an added level of scrutiny that this project and this contract are going to face," Smith said.

Some analysts are skeptical that any of the bidders are up to the task.

In the end, the Pentagon had a choice among three finalists that offered fairly mediocre systems for the price, said Ross Koppel, a professor of sociology at the University of Pennsylvania who studies health-information technology.

"All the systems are stunningly clunky, the interfaces are state of the art 15 years ago, the usability is far inferior to every other system of the modern era, and the lack of interoperability makes a hash of the data," Koppel said.