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Trump VA Secretary Firing Leaves A $10 Billion Contract With Kansas City's Cerner In Limbo

Elana Gordon
KCUR 89.3

The firing of Veterans Affairs Secretary David Shulkin means uncertainty for the VA’s pending $10 billion contract with Cerner Corp. to modernize the sprawling agency’s electronic health records system.

Health Data Management, an industry publication, reports that Shulkin’s ouster came as the VA was finalizing negotiations with Cerner.

Cerner referred inquiries to the VA, which said it does not comment on ongoing contract negotiations.

President Trump fired Shulkin via Tweet Wednesday night. In a New York Times opinion piece published Thursday, Shulkin said he was removed because he opposed privatization of the VA.

“I am convinced that privatization is a political issue aimed at rewarding select people and companies with profits, even if it undermines care for veterans,” Shulkin wrote.

The White House denies that his ouster was about privatization of the $200 billion agency.

Last June, Shulkin awarded Cerner a no-bid contract to upgrade the VA’s old electronic record system with one based on Cerner’s Millennium platform. Shulkin explained the sole-source award by saying the Defense Department and VA, which use different electronic health records systems, needed to use the same system.

The Defense Department awarded Cerner a $4 billion-plus contract in 2015. It’s being deployed in phases at military hospitals.

The House Appropriations Committee has expressed concern about the VA’s decision to adopt the Defense Department system. The committee included language in the House appropriations bill for the VA restricting funding until the Defense Department provides more detailed information about the project.

Health Data Management reports that in December, Shulkin ordered a “strategic pause” in the VA’s negotiations with Cerner to allow time for an external evaluation of the VA’s requirements for “interoperability” — the ability of health information systems to communicate with each other.   

The publication says that Shulkin’s firing “introduces an element of uncertainty into ongoing contract negotiations with Cerner, given his hands-on approach to the EHR modernization program.”

Politico quotes analysts at Wells Fargo as saying the disruption “puts in doubt the timing (and potentially the certainty)” of Cerner signing the contract.

“Analysts didn’t think the shakeup would cause the VA to select another vendor,” but rather to “just wait to finalize the agreement” with Cerner, according to Politico.

Politico’s eHealth newsletter reports that the CEO of CliniComp International, an electronic health records company that challenged the award of the no-bid contract to Cerner, has urged that the contract be delayed “so that the next Secretary has an opportunity to fully review the facts.”

The U.S. Court of Federal Claims in Washington, D.C., dismissed CliniComp’s lawsuit in December. CliniComp has appealed.

Dan Margolies is a senior reporter and editor for KCUR. You can reach him on Twitter @DanMargolies.

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