VA and Oracle Cerner reach agreement on electronic health record contract extension

The Department of Veterans Affairs has struck an agreement with Oracle Cerner following talks to renew a contract for the electronic health record modernization program.

In a statement on Tuesday, the VA said the renegotiated contract “dramatically increases” the agency’s ability to hold Oracle Cerner accountable across areas including reliability, responsiveness and interoperability.

According to the agency, the new contract will be structured as five one-year terms rather than one five-year term and includes a stipulation that the VA will receive larger monetary credits if Oracle Cerner fails to perform. The original EHR contract with Oracle Cerner had a five-year base period with a five-year option, which is the element that has been renegotiated.

Terms of the updated contract include a requirement that Oracle Cerner comply with 27 other performance metrics in addition to ensuring outage-free time, which is one of the key issues that has dogged the health record system.

Last month, the VA announced it was halting all further implementation of the electronic health record platform while it conducted contracted negotiations with Oracle Cerner over a potential extension of its initial $10 billion IT modernization contract that was signed in 2018 and came to the end of its base performance period.

The contract renegotiation followed pressure from lawmakers like House VA Technology Subcommittee Chair Rep. Matt Rosendale, R-Mont., who in public hearings previously questioned the size of financial penalties imposed on Oracle Cerner for underperformance.

Commenting on the contract renegotiation, Dr. Neil Evans, acting program executive director of the electronic health record program, said: “These new accountability measures will be critical as we focus on improving system reliability and performance at the five sites that currently use the new EHR, as part of the larger program reset announced in April.”

“Specifically, the amended contract lays the groundwork for VA and Oracle Cerner to resolve the EHR issues identified by the “assess and address period” and optimize EHR configuration for future sites,” Evans added.  

Evans said the VA believes the new contract will give the agency the tools it needs to hold the technology company to account.

Since its rollout to five VA healthcare systems, the electronic health record platform has been hit with repeated outages and resulted in widespread complaints from frontline clinicians.

In a report published last year, an investigation by the department’s inspector general linked the system with at least six cases of catastrophic harm, including four deaths.

Commenting on the new contract extension, Oracle Global Industries Executive Vice President Mike Sicilia said: “This new agreement reflects Oracle’s commitment to Veterans’ health care as well as complete confidence in our technology and our partnership with the VA to deliver an EHR that far exceeds the expectations of users.”

Editor’s note, 5/16/23: This story was updated to include comment from Oracle.