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DoD Contract Could Be Major Force in Shaping EHR Interoperability

By Clinical Informatics News Staff

September 8, 2014 | The Department of Defense is planning new measures to overhaul its electronic health records (EHR) system, which covers the medical histories of roughly ten million Americans. The DoD is scheduled to begin retiring its patchwork of legacy systems by the end of 2016, and is seeking a complete off-the-shelf replacement from a commercial provider. The project, termed the DoD Health Management System Modernization (DHMSM), opened for bids on August 25, and is estimated to be worth $11 billion over a period lasting through 2030.

The pressure on EHR providers to compete for the DHMSM contract, one of the largest IT contracts in government history, could be a positive force in the industry, thanks to the DoD’s unique interoperability needs. The Department will require its records to be rapidly accessed not only in its own hospitals, clinics, and ambulatory care centers, which number in the hundreds, but also by thousands of private centers where service members and their families receive care, and by the Department of Veterans Affairs. The sheer size of the DoD’s health coverage, which pays out $50 billion annually, ensures that interaction with other care providers is a regular event.

Interoperability of EHRs has been a monumental challenge for healthcare providers in the U.S., where platforms have been quickly proliferating as hospitals rush to secure federal incentive payments for upgrading their records to a digital format. In many cases, providers quickly find they are unable to transmit patient information to other locations if they do not share the same EHR system. The problem is especially felt when moving beyond basic structured data fields like age, sex, and prescriptions, and into the detailed disease and treatment histories that can best inform patient care. This breakdown in data sharing has been widely seen to undermine the promise of EHRs to bring greater consistency and oversight to treatment, and to prevent avoidable hospital errors brought on by lack of knowledge about a patient’s history.

The DoD has made clear that it expects bidders for the DHMSM contract to offer ready-to-go solutions, with no further customization required. As a result, the industry’s largest players will have a renewed incentive to compete on interoperability. Enforcing a high standard of data sharing capabilities among bidders could have effects across the industry, as off-the-shelf platforms are updated with the DoD’s requirements in mind. The Department may also have the chance to address other persistent complaints about EHR systems, including poor ease of use for doctors during patient visits, and security risks surrounding health data.

Three of the leading commercial EHR providers, Epic, Allscripts, and Cerner, have already announced their intentions to compete for the contract. Because of the scale and complexity of the DHMSM project, all three have teamed up with major IT partners who will contribute to data management and analytics. Epic is working with IBM, Allscripts is working with Hewlett-Packard and Computer Sciences Corporation, and Cerner has formed a collaboration with the large government contractors Leidos and Accenture.

A fourth bid also came in last week from PricewaterhouseCooper, in cooperation with MedSphere, DDS, and General Dynamics IT. While MedSphere and DDS are much smaller EHR companies than their competitors for the DHMSM contract, the partnership is notable because MedSphere’s product is an open source version of VistA, the widely-admired system used by the VA. DoD had once been in talks with the VA to share a single platform, but that project broke down last year, as cost estimates reportedly ballooned out of control. Still, VistA remains a promising model for a large and widely interconnected EHR, and the VA itself has suggested it may submit a bid of its own before the October 9 deadline.


The Defense Department expects to make a final decision on the DHMSM contract by summer of 2015, and begin rolling out its new EHR the following year. With billions of dollars on the line, DoD now has a unique window of opportunity to shape the national health records ecosystem to everyone’s benefit.

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