Federal IT analyst: Federal government shutdown would throw wrench in VA deal with Cerner

With federal spending priorities in flux and VistA technology issues still to be ironed out, one expert parses out what we might expect in the weeks ahead.
By Mike Miliard
10:34 AM
Cerner EHR VA DoD

Trying to predict what federal IT budgeting and expenditures will look like in the year ahead is difficult, if not impossible. So we asked Chris Wiedemann, market intelligence senior analyst at McLean, Virginia-based immixGroup, a value-added distributor of public-sector enterprise technology, for his perspective on what spending and resource allocation might look like on just one government health IT project in the year ahead – albeit arguably the biggest one.

Even that – the U.S. Department of Veterans Affairs choice of Cerner to modernize its longstanding VistA electronic health record – is, at this moment at least, hard to reckon with any certainty.

For one thing, there's still no contract yet, even though VA Secretary David Shulkin, MD, tapped Cerner as the sole source vendor for the project back in June.

[Also: Shulkin asks Congress for $782 million to jumpstart Cerner EHR project for VA]

Cerner President Zane Burke told Healthcare IT News three weeks ago that the two sides are working toward a contract finalization, but didn't offer a timeline: "we're anxious to do that and are working hard to do that," he said.

"We've heard that promise that there would be a contract soon twice already by my count – once in September and once again in October," said immixGroup's Weidemann. "Obviously, there was the CliniComp lawsuit, so it's been a bit rocky. But my guess would be that you would see an award early in the new year, in January. But that's just a guess.

In the meantime, "from a market trend standpoint, as far as federal health IT spending goes, we're keeping as close an eye as everyone else is on the Cerner contract award, whatever the final system design and system architecture ends up looking like," he said. "Because I think that's what's going to shape the health IT market in this fiscal year."

[Also: Cerner DoD overhaul coming out in waves; VA deal means 'single system' approach]

Even if a contract were to be announced tomorrow, however, a few wild cards in Washington could potentially slow down the Cerner VA deal's forward momentum, said Weidemann

For one thing, "I think that a shutdown after Dec. 8 is likelier than I thought it was even a few weeks ago," he said. "It seems like the things I was sort of waving off as political posturing from Congressional Democrats and the White House, they actually look like they're a little more entrenched than I thought they were."

A government shutdown of, say, two weeks "would have a pretty significant knock-on effect for a project like the Cerner VistA replacement, just because of all the upfront work that's required to do that, and the amount of upfront capital investment that would be required," said Weidemann. 

"What I think we can infer from the last government shutdown is that for each day that that drags on, things like a full-year continuing resolution or a relatively clean omnibus without a lot of hot-button appropriations issues one way or another, will start to look more appealing for each day that they government is closed," he added. "Certainly a shutdown would be a real wrench in the works."

Another thing to consider: Despite President Donald Trump's lofty words in June – he called the VistA modernization deal "one of the biggest wins for our veterans in decades," and said Cerner would help solve the VA's interoperability challenges "once and for all" – "it's hard for me to get a read on just how high a priority this kind of system modernization is for this administration," said Weidemann.

"The sense that you get just from the coverage is that they have other issues from an appropriations standpoint that they care about more."

What if, for instance, the funding necessary to get the project off the ground were to be used as leverage for another project the president is truly passionate about?

"You could end up seeing – and I don't know that this is likely but it's certainly possible – that full-funding for the VA modernization becomes something of a bargaining chip in return for border security investment or hiring at Immigration and Customs Enforcement or something like that," said Weidemann. "That would be another speed bump."

Size, scope and cost of VA project still TBD

Presuming there no unforeseen political shenanigans in the Nation's Capital, however, the VA deal will move forward as planned, very soon. And when it does, the sheer size and scope of the project will have a gravitational pull of its own over other areas of health IT, said Weidemann – even if we still don't know just how big it will be.

"What I keep coming back to is, assuming a perfect world where there are no more hold-ups in the contract award, no more significant appropriations issues, a lot of this will hinge on how much the VA, how much stakeholders on the health IT side are bought into this commercial-off-the-shelf migration vision and how much they're willing to give up of their existing or legacy solution or code base," he said.

"VistA at its core is an EHR platform but there's a significant amount of support functionality that's built into that. Do you replace that core EHR with Cerner but keep the existing support applications, custom applications and code that's been built on top of that for things like logistics management and supply chain for pharmaceuticals? If the answer to that is yes, that's interesting to me as a general COTS vendor, and if the answer is no, that you want to go COTS there as well, that opens new angles and new opportunities.

"If I were someone who was previously locked out of VA, I would be paying attention to what that system design and architecture looked like," Weidemann added. "There's the potential here that the department wants to move more fully into the COTS space than they have in the past. And that it goes beyond core electronic health records."

A lot of that might depend on how much money the VA is actually able to spend on the project. Secretary Shulkin asked Congress for a substantial chunk of change this past month – requesting that it redirect a total of $782 million from the 2018 fiscal budget: $690 million from medical care and $92 million from IT projects.

He did so even while recognizing that limitations inherent in the continuing resolution governing the budget meant that just $324 million from the former and $50 million from the latter could be disbursed right away. But that amount is the minimum necessary to start work on the project, Shulkin said.

"My expectation is that in order for the VA to do what the secretary appears to want to them to do, they're going to need a significant amount of capital investment in this fiscal year and next," said Weidemann. "But this is not an easy time to get capital investment of any magnitude through congressional appropriations for non-Defense agencies."

That said, "VA probably has a better shot at that than most others," he added. "But I would be surprised if the department gets what they're asking for in full. That hasn't been the trend for the past few years – and that was with an Obama administration that was slightly more expansive view of what non-Defense discretionary expenditures should look like."

With so much downward pressure on budgets right now, said Weidemann, "my guess would be that you'll maybe see a slight downscaling of expectations, either on time frame or in terms of how expansive this migration or rip-and-replace ends up being. Because I doubt that the VA gets the full amount that they're asking for."

Twitter: @MikeMiliardHITN
Email the writer: mike.miliard@himssmedia.com

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