Secretary of Defense Chuck Hagel has notified the Department of Defense that it will look for an electronic health record system available on the commercial market rather than develop its own based on the Department of Veterans Affairs VistA system.

"I am convinced that a competitive process is the optimal way to ensure we select the best value solution for DoD," Hagel wrote his May 21 memo to Under Secretary of Defense for Acquisition, Technology and Logistics Frank Kendall and Acting Under Secretary of Defense for Personnel and Readiness Jessica Wright.

The memo was first obtained and reported by Nextgov.

In his memo, Hagel said he based his decision on the results of a 30-day review of the Integrated Electronic Health Record program by a group of leading senior DoD officials.

[See also: VA, DoD on tighter leash with iEHR.]

"A competitive process will alow DoD to consider commercial alternatives that may offer reduced cost, reduced schedule and technical risk, and access to increased current capability and future growth in capability by leveraging ongoing advances in the commercial marketplace," he wrote.

While Hagel said there are good reasons the VA selected its legacy system for its EHR core, those reasons do not apply to DoD.

"Also, based on DoD’s market research, a VistA-based solution will likely be part of one or more competitive offerings that DoD receives."

Hagel directed the DoD to:

• DoD will continue to work with VA "to develop data federation, presentation and interoperability." This is seen as primary, near-term goal to be pursued separately from the department's longer-term goal of modernizing its health record information technology (IT).
• DoD will seek full and open competition for EHR modernization.
• The Assistant Secretary of Defense for Health Affairs will act as the functional sponsor for this capability and Wright's office will continue to be in charge of coordinating health care with VA.
• Kendall will assume responsibility for DoD's healthcare records interoperability and modernization efforts. He shall also take the lead on the technical and acquisition aspects of coordination with VA.

Choosing to go to the commercial marketplace opens the doors for EHR companies, such as Epic, Cerner, Siemens and others to land a lucrative government contract. Medsphere, which has developed an EHR system based on the VA’s VistA system, could be a contender too, as Hagel indicated in his memo that a VistA-based solution would likely be in the mix of proposals to DoD.

[See also: DoD, VA to accelerate EHR integration.]

In his blogs, Medsphere CMIO Edmund Billings, MD, is often critical of rival EHR companies like Epic and Cerner, most recently scrutinizing the millions health systems are spending on implementing a typical commercial system.

"Can we justify hundreds of millions for an EHR that contributes greatly to a negative financial position?" Billings asks.

In recent years, Epic has been singled out as the likely replacement for the DoD’s clunky AHLTA system, and Epic CEO Judy Faulkner, who sits on the federal Health IT Policy Committee, has been criticized by competitors as having an unfair advantage. More recently, several Epic competitors formed CommonWell with the aim of boosting interoperability among EHR systems; Epic was not asked to join.

[See also: Six HIT heavy-hitters announce interoperability organization.]

Interoperability seems paramount to Hagel.

“More interoperable EHR in the near term and a modernized EHR system in the mid term will create an environment in which clinicians and patients from both departemnts are able to share current and future healthcare information for continuity of care and improved treatment," he wrote in his May 21 memo.