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Cerner updates progress on VA, DoD projects



Cerner Corp.'s president of government services provided updates on its contracts with the U.S. Department of Defense and the U.S. Department of Veterans Affairs at an investor conference Wednesday.

Travis Dalton said the North Kansas City-based health IT company (Nasdaq: CERN) had learned several lessons from the DoD project that it will apply to the VA contract. Cerner is implementing its electronic health record system, MHS Genesis, as part of a $4.3 billion contract it and Leidos Holdings Inc. (NYSE: LDOS) were awarded in 2015. The DoD increased its budget by $1.2 billion in July 2018.

Leidos is the prime contractor for the DoD project, with Cerner the subcontractor. The roles are reversed with the VA contract.

With 70 percent common capabilities with the VA, Dalton said DoD's system will form the baseline for the VA's EHR. Cerner secured a $10 billion contract for a 10-year implementation of its EHR program with the VA in May. The cost grew to $16.1 billion in part because the VA failed to budget for the cost of government employees.

The VA's EHR will have 30 percent more capabilities than its counterpart, including cardiology and long-term-care features, Dalton said.

Cerner also is providing programs for the VA that it hadn't for the DoD, such as a comprehensive workflow-based training program focused on user capability. The company also will provide a help desk.

The DoD will deploy MHS Genesis in 23 waves. Dalton noted that the first set of Initial Operating Capabilities (IOCs) have been live more than two years and that Cerner is pleased with the progress, estimating contract completion in 2025.

The VA will deploy its EHR in 47 waves. Its first IOCs will go live during the first half of 2020. Wave deployment will be more aggressive than the DoD, with an estimated contract completion in 2028, Dalton said. Cerner has established 18 EHR councils made up of "industry experts" to support standardized workflows.

Cerner has completed seven task orders with the VA, he said, and the revenue from the $10 billion contract will trickle in as tasks are completed.

Dalton also told investors Cerner was "trying to change the narrative a bit" around the topic of the VA.

"We tend to talk in terms of APIs and interoperability, but we want to be talking about chronic condition management and curbing opioid abuse, suicide prevention," Dalton said.

Congress has expressed concern about the interoperability of EHR systems between the VA and DoD, as well as between the VA and community providers — a key component to the success of the VA's EHR modernization.

Dalton characterized the environment around Cerner's government services as constantly changing because of political cycles, budget changes and turnover.

"We have to continually express the value of the program and why we're doing this," he said. "I call that putting Kevlar around the program. I think it's important we sell the value on a continual basis."

The DoD has 9.4 million eligible beneficiaries, and the VA has 9.12 million total enrollees in its health care system.


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