VA sets Memorial Day deadline to decide on Cerner EHR

Jon Rychalski, the VA's CFO and assistant secretary for management

Nearly a year after it was first announced the Department of Veterans Affairs would be replacing its in-house electronic health record (EHR) system with a Cerner platform, the contract hasn’t been finalized. A senior VA official now says the agency’s acting chief has set a deadline of Memorial Day—May 28—to make a decision on the acquisition.

The deadline was revealed by Jon Rychalski, the VA’s assistant secretary for management and chief financial officer, at a May 9 hearing before the Senate subcommittee on appropriations for the VA. He told lawmakers Acting VA Secretary Robert Wilkie “came in cold” in regards to the Cerner contract while being more familiar with the health IT giant’s separate EHR deal with the Department of Defense (DOD).

“He knew what was going on with DOD but not enough about the VA, and felt he needed to do due diligence to make sure that he was comfortable in making a decision of this magnitude,” Rychalski said.

That resulted in another delay in getting the deal done. It had already been postponed by former VA Secretary David Shulkin, MD, over disagreements on definition of interoperability with the DOD—a key reason Cerner was awarded the contract without going through a competitive bidding process.

Rychalski said those discussions on interoperability were “probably worthwhile,” as an interoperability assessment “came up with about 50 recommendations” which can be incorporated into the contract.

The delayed project is still commanding a lot of federal money. $782 million had been dedicated to the EHR implementation in the fiscal year 2018 budget, about $182 million of which Rychalski said will be carried over into the next fiscal year. The VA has requested another $1.2 billion for the EHR transition on top of what will be left over.

Sen. Brian Schatz, D-Hawaii, questioned why the VA would need to dedicate $2 billion to the transition when no contract has been finalized and the Department of Defense has suspended its own Cerner EHR rollout.

“There’s no reason to appropriate $2 billion when it’s going to sit in a pile when we have other urgent needs,” Schatz said.

Rychalski said the vast majority of that 2019 money—about $1.1 billion—will be going to Cerner.

The delay, which has been partially blamed on interference from friends of President Donald Trump as well as Shulkin’s exit from the agency, has also hurt Cerner’s bottom line. The company reported a $13 million dropoff in net earnings for the first quarter, with the “delay of a large contract” contributing to the decline.

Cerner didn’t immediately respond to a request for comment from HealthExec.