Cost of VA's New Medical Records System Could Triple to $50 Billion, Report Claims

Veteran Affairs building near the White House in Washington.
The Department of Veteran Affairs building near the White House in Washington, D.C., is shown on Feb. 14, 2018. (Pablo Martinez Monsivais/AP Photo)

The total cost of the Department of Veterans Affairs' new electronic medical records system could be more than triple its current $16.1 billion budget when factoring in delays, maintenance and other expenditures that aren’t part of the contract, a new report has found.

The Oracle Cerner Millennium electronic health records system, originally estimated to cost $10 billion and later revised to $16.1 billion, could run $39 billion higher if the rollout takes three years longer than anticipated, and may require another $17 billion to sustain it over its lifetime, according to an Institute for Defense Analyses report delivered to Congress on Monday.

During a hearing Wednesday on the troubled program, members of Congress called the potential cost outrageous given that the system has been introduced at just five VA medical centers and their affiliated clinics and all have experienced problems with the software.

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"VA already considers the system unsafe to roll out at large complex medical centers, and the path to make it safe is unknown," said Kansas Sen. Jerry Moran, the ranking Republican on the Senate Veterans Affairs Committee, during a hearing Wednesday.

According to the report, the VA's $16.1 billion estimate does not include associated costs such as long-term maintenance, increased staffing, and funding for expanded community care while VA medical center staff learns the new system.

"For nearly two years, [medical center staff has] done all they can to provide health care to veterans in the middle of a pandemic, and with an electronic health record system that is not delivering," Senate Veterans' Affairs Committee Chairman Sen. Jon Tester, D-Mont., said during the hearing.

Last week, the VA Inspector General released the results of two investigations into the health records system, finding that a portion of its design led to the effective disappearance of 11,000 medical orders or referrals, resulting in 149 cases of patient harm, including at least one life-threatening incident.

The IG also found that two VA training leaders at the Mann-Grandstaff VA Medical Center in Spokane, Washington, where the system premiered, provided incomplete or inaccurate information to the Office of Inspector General, hampering ongoing work by the office.

Recent troubles at Mann-Grandstaff -- as well as outages and slowdowns across the system, including nearly 50 computer crashes or disruptions -- have resulted in implementation delays.

Just before the hearing Wednesday, VA Secretary Denis McDonough confirmed that a launch planned for Boise, Idaho, on Saturday has been placed on hold.

The delay is the third pause in a month; in June, the VA said it would delay the system's introduction in the Puget Sound area of Washington for up to seven months and the VA Portland Health Care system in Oregon until next year.

"We continue to assess every day the reliability of the system at each of the sites where it's currently deployed, as well as decisions about onward deployments," McDonough said during a press conference in Washington, D.C. "We are closely in touch with providers on the ground."

VA officials said the estimates in the Institute for Defense Analyses report included costs that aren't associated with purchase and implementation of the system. They called any comparison between the $16.1 billion contract and a $50 billion-plus cost estimate an "apples to oranges" contrast.

"That’s a life-cycle cost estimate. It includes a 25-year horizon, as well as a risk premium in case certain things don't happen, they will cost more. They also include reductions in operations. It's really difficult to compare that. I work with the deployment budget, and we are doing everything we can to ensure efficiencies within that budget," said Dr. Terry Adirim, VA’s program executive officer for the Electronic Health Record Modernization Integration Office.

During the hearing, Oracle Cerner officials told lawmakers that the company has established a "war room" to study the problems, adding that there were none that could not be overcome.

Last month, McDonough said his "confidence in the system has been shaken," but he added on Wednesday that the department is committed to the program and "realizing the promise at the heart of a modernized electronic health record."

Those include interoperability with the Defense Department for medical records that will follow service members from boot camp through the end of their lives, are accessible and can support medical research and treatment.

"We take very seriously the challenges that have been outlined, and we will continue to wring those out of the system," McDonough said.

-- Patricia Kime can be reached at Follow her on Twitter @patriciakime.

Related: Lawmakers Balk at VA Plans to Roll Out Electronic Medical Records System

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