Hagel Opts for Commercial Electronic Health Record Software

Defense Secretary Chuck Hagel opted to run procurements for commercial electronic health record software, which will “likely” include software based on the system used by the Veterans Affairs Department. The move is considered a blow to VA and a boon to the healthcare information technology industry, multiple sources said.

In a memo obtained by Nextgov, Hagel said today that “a competitive process will allow DoD to consider commercial alternatives that may offer reduced cost, reduced schedule and technical risk, and access to increased current capability and future growth in capability by leveraging ongoing advances in the commercial marketplace.”

The Defense secretary reached this decision after a 30-day review of the DoD-VA integrated electronic health record program led by Frank Kendall, undersecretary of Defense for acquisition, technology and logistics, and Jessica Wright, acting undersecretary of Defense for personnel and readiness. Hagel said based on that review, “I am convinced that a competitive process is the optimal way to ensure we select the best value solution for DoD.”

Though VA has pushed its Veterans Health Information Systems and Technology Architecture (VistA) system for use by Defense and has “good reasons” to use it as the core of a next-generation EHR, Hagel wrote, “many of these reasons do not apply to DoD. Also, based on DoD’s market research, a VistA-based solution will likely be part of one or more competitive offerings that DoD receives.”

He directed:

• Defense should continue near-term work with VA on data federation, presentation layers and interoperability, a priority separate from long term health IT modernization;
• Defense will pursue a full and open competition for a core set of capabilities for EHR modernization;
• As Nextgov previously reported, Kendall will assume direct responsibility for Defense health care interoperability and modernization programs and lead coordination with VA.

Hagel concluded his memo, sent to Kendall and Wright, by saying, “Approaching this challenge in this manner will ensure that DoD acquires the right healthcare IT to meet its requirements while ensuring interoperability with VA, that this acquisition is conducted in a manner that achieves the best value for America’s taxpayers, and that DoD invests in healthcare IT that is sustainable over the long term.”

“It is important we get this right -- for those who serve and have served our nation,” he added.

Hagel did not use the term iEHR in his memo except for reference. Instead, he said, a “more interoperable EHR in the near term and modernized EHR in the midterm” should be the focus of both Defense and VA to create an environment “in which clinicians and patients from both departments are able to share current and future healthcare information for continuity of care and improved treatment.”

Hagel earlier had promised the House Appropriations Committee’s panel on defense that he would reach a decision on the approach Defense would take on the iEHR by May 16.

Multiple government and industry sources said the decision was delayed by an impasse between Defense and VA, which required White House intervention to resolve. What is still unresolved, one industry source said, is exactly how “integrated” the Defense and VA health records systems will be if each continues to follow a separate path.

Hagel did not identify the core EHR capabilities Defense plans to acquire, but government and industry sources said these include commercial pharmacy, lab and immunization systems put out for industry comment in December 2011, June 2012 and August 2012, respectively. Industry sources expect Defense to quickly update these and put out formal request for proposals.