Epic is denying the main allegation in Cerner's protest that claimed there was a conflict of interest in the EHR contracting process at the Chicago-based University of Illinois Health, which awarded Epic a $62 million, seven-year deal in late 2017 to overhaul its health records, Becker's Hospital Review has learned.
Becker's obtained and reviewed a six-page response Epic Founder and CEO Judy Faulkner submitted to the Illinois Procurement Policy Board May 16 in which the EHR giant laid out several reasons Cerner's protest should be denied and the contract be upheld.
"There is nothing in the record to suggest any conflict of interest or improper conduct," she wrote. "Therefore, the award of the contract should stand."
Cerner filed the protest with Illinois' chief procurement office for higher education in December, after Epic was awarded the contract four months earlier. Cerner alleged the bidding process was unfair and tainted by a possible conflict of interest, and the North Kansas City, Mo.-based EHR vendor also claimed its bid was $1.5 million lower than Epic's and included all implementation costs.
Illinois rejected the protest in January, ruling Cerner didn't submit a proposal demonstrating its technical qualifications at the minimum required level and noting it awarded Epic the contract through a request for proposals, not a competitive bidding process. However, Cerner hit back, claiming the proposals were supposed to consider all costs associated with the overhaul, and additional fees could drive the total costs of an Epic implementation as high as $100 million — a bill taxpayers would have to foot.
Epic's letter notes Cerner's $60.5 million bid was lower than Epic's $62 million proposal, but pointed to UI Health's additional cost analysis for the "all in" prices of the two vendors, which revealed Cerner would cost $154 million — $3 million more than Epic.
"The supposed cost difference Cerner has often pointed to simply doesn't exist," Ms. Faulkner wrote.
The letter also notes Epic's disclosures abided by state statutes and did not constitute a conflict of interest. The company adds UI Health's work with Impact Advisors also did not taint the process as Cerner suggested.
Although UI Health contracted with Impact Advisors in 2014 for separate IT projects, according to the letter, Cerner claimed Impact Advisors "unfairly and improperly influenced the decision to select Epic while concurrently holding a financial interest in Epic's selection." However, Epic contends no one from Impact Advisors served as an evaluator of the two companies' proposals at board meetings in February and April.
Additionally, Cerner has not explained how it believes Impact Advisors advantaged Epic or disadvantaged Cerner — as was iterated in Chief Procurement Officer Ben Bagby's January ruling denying the protest. Ms. Faulkner noted UI Health was "crystal clear" it would need staff augmentation services regardless of who is awarded the contract, but Epic made "no promise or arrangement to compensate Impact Advisors or any other firm." She called Cerner's claims against Impact Advisors a "hypothetical future situation."
"If these stars align, Cerner has asserted that Impact Advisors might stand to benefit from the implementation of Epic's solution," Ms. Faulkner wrote. "At this stage, it is uncertain whether Impact Advisors would submit a response to such an [request for proposal] or if [UI Health] would award any portion of such a contract to Impact Advisors."
Epic concluded its letter with statistics and data to back up UI Health's selection. Here are the five claims Epic made.
1. "Epic is a better system." Epic points out it supplies EHRs for the 94 percent of U.S. News & World Report's top ranked hospitals and medical schools, and KLAS has ranked it the No. 1 EHR suite for the past eight years.
2. "Most health systems in Illinois have also selected Epic." Nearly 89 percent of Illinois patients receive care from health systems that have or are planning to install Epic.
3. "Many health systems have left Cerner and moved to Epic. None have left Epic to move to Cerner (excluding acquisitions)." Since the beginning of the year, five large health systems across the U.S. made the decision to switch from Cerner to Epic. In Illinois, this includes Downers Grove-based Advocate and Chicago-based Northwestern Medicine.The letter adds that UI Health has deployed both Cerner and Epic in the past and should have adequate experience with each vendor.
4. "Epic's implementation costs are reliable." The letter notes 90 percent of Epic installs come in on time and under budget, adding "customer surveys performed by KLAS … rate Epic highly for costs being what Epic said they would be, i.e., Epic doesn't 'nickel and dime.' Surveys by KLAS give Cerner a poor rating for nickel and diming."
5. "Health systems on Epic are better off financially." Citing September 2017 data from Moody's Investors Service, Epic noted health systems that move from Cerner to Epic noted significant improvements to their operating margins — a nearly 84 percent increase after five years.
The next Procurement Policy Board meeting is set for Tuesday, May 29.
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