Cerner earnings hurt by delay in EHR contract for VA
Cerner reported its first quarter net earnings fell by $13 million compared to 2017, with the health IT giant acknowledging the delay in finalizing its hefty contract to bring a new electronic health record system to the Department of Veterans Affairs (VA) contributed to the decline.
Zane Burke, president of Cerner, said during its May 2 earnings call that bookings remained strong (rising 12 percent) as did cash flow, but revenue was below expectations.
“Our mixed results and revised outlook reflect the delay of a large contract and a less predictable end market,” he said in a statement. “However, we remain optimistic about our long-term growth opportunities due to our strong market position and portfolio of solutions and tech-enabled services that align with the pressures health care stakeholders are facing.”
The $16 billion deal to rollout a new EHR at the country’s largest health system was first announced in June 2017 under VA Secretary David Shulkin, MD. However, negotiations on a final contract—first expected to be signed in October of last year—had stalled over Shulkin’s reported concerns about Cerner’s definition of interoperability being too limited, a major facet of the deal since part of the reason Cerner was chosen was because it’s already rolling out a new EHR at the Department of Defense.
Now Shulkin is gone from the VA, with one of his many frustrations reported to be interference from Bruce Moskowitz, MD, a Florida physician in President Donald Trump’s social circle who doesn’t like his Cerner EHR and has been holding up the deal.
With Trump’s first pick to replace Shulkin, White House physician Ronny Jackson, MD, withdrawing his nomination, the deal remains up in the air. Cerner said during the earnings call that it now doesn’t expect any contract to be finalized until the second half of this year.
Democrats are now turning their attention to what’s holding up the deal and whether people associated for Trump are responsible. Two top Democrats on House subcommittees, Reps. Annie Kuster, D-New Hampshire, and Julia Brownley, D-California, have requested Acting VA Secretary Robert Wilkie provide information on the status of contract talks with Cerner and have the department’s inspector general investigate “inappropriate influence on the process by outside individuals.”
“I’m disturbed by reports that individuals without any role at the VA may have hampered efforts to move forward with reforms that would update VA’s EHR system and allow full interoperability with the Department of Defense and community providers,” Kuster said in a press release. “These delays are unacceptable and we need to know what has caused them and how they will be resolved. Our veterans deserve seamless health care from the VA and its partners, and that goal simply cannot happen when the VA is using systems designed decades ago. We owe it to our veterans to ensure that the VA is operating at the highest possible level.”
John joined TriMed in 2016, focusing on healthcare policy and regulation. After graduating from Columbia College Chicago, he worked at FM News Chicago and Rivet News Radio, and worked on the state government and politics beat for the Illinois Radio Network. Outside of work, you may find him adding to his never-ending graphic novel collection.