The Pentagon is expected Wednesday to award a
multibillion-dollar contract to modernize its health-records
system, the biggest federal information-technology project since
the troubled rollout of the HealthCare.gov insurance exchange in
2013.
Three industry teams are competing for the highly coveted
project that is expected to take several years to transfer records
of 9.6 million military personnel from a fragmented patchwork that
still includes paper files to a single electronic system. Pentagon
officials have said the system will be more easily available to
health-care providers, and with added cybersecurity protection.
The Defense Department has opted to adapt a system from one of
the big commercial health IT providers in an effort to keep the
revamp affordable, though the move has attracted criticism from
some observers concerned that it could soon be outdated and
expensive to maintain.
The Pentagon earlier this year selected three industry teams led
by some of the largest commercial health-records managers ahead of
the initial contract award that is part of an 18-year project
expected to cost around $11 billion.
Closely held Epic Systems Corp. has joined International
Business Machines Corp., while Allscripts Healthcare Solutions Inc.
has teamed with Computer Sciences Corp. and Cerner Corp. with
Leidos Holdings Inc.
"This is really not an IT project, it's a business
transformation project," Dave Bowen, chief information officer for
Pentagon's Military Health System said in an interview earlier this
year.
The Military Health System budget funds Pentagon-run hospitals
and clinics, a medical school and external medical support for 9.6
million beneficiaries, including about 1.3 million active-duty
service members.
Health care accounts for around 10% of the Pentagon's total
budget compared with 6% in 2000, and costs have more than doubled
over that period, according to the Congressional Budget Office.
Alongside improved patient benefits, the new records system is
expected to provide more insight and oversight of medical spending,
with more than half of treatments for service members carried
outside Defense Department-run facilities.
"We can drive standardization and look at operating metrics,"
said Mr. Bowen, with the centralization of spending on health IT
helping to avoid what he referred to as "pet projects," noting that
maintaining the aging existing record system was eating up the
majority of its IT budget.
The Pentagon said it would announce the winning bidder later
Wednesday, and officials said it was due to be tested at a number
of locations in the Pacific Northwest before being rolled out
across the broader health network.
The bidders declined to comment ahead of the announcement.
Mr. Bowen said choosing the vendor was just the first step, with
the biggest challenge being how it managed the data.
However, the Pentagon's decision to opt for the enterprise
software approach used by big private hospitals to manage health
records has come under fire from critics who said it should have
pushed for a more innovative, cloud-based approach.
"If the Defense Department remains on its current path, it will
end up spending continuously on upgrades needed to keep its health
records abreast of changes happening elsewhere," said Loren
Thompson at the Lexington Institute, a think tank part-funded by
big defense companies, in a recent policy paper.
Write to Doug Cameron at doug.cameron@wsj.com
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