DOD Briefing by Under Secretary Kendall on the Electronic Health Record Modernization and Healthcare Management Software from the Pentagon Briefing Room

            LT. COL. MELINDA MORGAN:  Good afternoon, and thank you for being here today for the press briefing on the department's decision on the electronic health records and the healthcare management software.  I have the pleasure of introducing Mr. Frank Kendall.  He is the undersecretary of defense for acquisition, technology and logistics.  

            Mr. Kendall will be providing opening remarks.  After his comments, we will get to your questions.  We've got about 30 minutes for the briefing.  Please introduce yourself by name and media organization.  

            Mr. Kendall, the floor is yours. 

            UNDER SECRETARY OF DEFENSE FRANK KENDALL:  Afternoon.  Thanks for being here. 

            As you're probably aware, the secretary, in testifying about a month ago, indicated that he would look at the question of the best path forward for DoD in terms of healthcare records and the systems that manage healthcare records for the department, to get back with a decision on what course we were going to proceed on. 

            And he has -- he has asked me to lead what was a fairly intense 30-day review of -- of the current situation and make a recommendation to him.  So I've done that, and the secretary's made a decision, which I'll tell you about in a second.  And then I'll take some questions, after I explain the path that we're on. 

            This came about in part because we had to confront a decision about what the best acquisition strategy was, if you will, for healthcare modernization.  There are two pieces to what we're trying to do in healthcare.  The first piece is about the seamless integrated system of healthcare, where healthcare records that you could call a single, seamless integrated healthcare record moves from the Department of Defense to VA [Veteran's Administration] or to someone else who needs to use that record in providing healthcare. 

            The president has an initiative to establish national standards for healthcare records.  And part of this effort has been to work with the VA to get us in compliance with those standards, and that will enable healthcare records to move much more easily between DoD and the VA. 

            We do two things.  Let me say -- make a comment about that -- with the records that we send to VA.  They're used for benefits and disabilities determinations.  They're also used for healthcare.  And those are two very different purposes. 

            For several years now, we have been sending electronic healthcare records to DoD [sic: VA], which are read-only records, and what happens is those records get to DoD [sic: VA], and they can go to a person who's trying to determine benefits or the extent of disability.  And they can be read, and they are being read, and they're being used for that purpose. 

            And because of that, DoD is able to, within about 45 days, give VA the records it needs to make those determinations.  So that's not really a major part in any way of the backlog that VA is dealing with right now.  And so I want to separate that function, the issue of determining benefits and the records we send for that purpose, and the broader purpose or the other purpose of healthcare itself. 

            The records that we send to the VA are also used in the VA system of providing healthcare, and it's there that we're really focused on trying to improve; the records that are used by doctors and clinicians.  So the first step in that, the first effort is to get in compliance with the standard data formats for records so that the data moves in an integrated, seamless way.  That's been underway for some time. 

            And we've made an investment in that which is paying off.  We have a relatively short-term goal of having integrated seamless records with the VA by the end of this year.  And we hope that we can make that date.  We're working hard to do that. 

            So that part of it is going to continue.  The first part of the decision is that's a priority, that's consistent with what the president's trying to accomplish, and it'll put both the DoD and the VA on the same path we'd like the rest of the healthcare providers out there to be on. 

            Separate from that, as a separate effort is the need to modernize the system that we use and our doctors use to provide healthcare.  And this is the information system, if you will, with the information technology system that is one of our business systems.  It's used for the -- for providing healthcare to our people.  And it's used by doctor primarily.  It is the source of our records.  Records are created out of this system.  But it's there primarily as a tool for doctors to use as they're providing healthcare.

            Now, we need to modernize our system, and VA needs to modernize their system.  And there's no requirement that we use the same software to do that.  A few months ago, VA made a determination that they would proceed down a modernization path using their existing healthcare system.  That's VistA.  It's V-  I-S-T-A. 

            So they made a unilateral decision to do that.  It was a reasonable decision for VA.  VA had an installed base in VistA.  They had a lot of people trained in it, do a lot of the programming in-house.  They understand it very well.  Their physicians are familiar with it. 

            So they're going to build their modernization program for their core capabilities for healthcare management software on VistA.  That left DoD with the problem of having to make a decision about whether to go down the same path or to go to a broader set of options and to select from a broader set of options. 

            So the study that I did was to look fundamentally at that question.  What was the right course of action for the Department of Defense to provide best value to our people and the best possible healthcare to our people as efficiently as possible? 

            And the conclusion after the work that we have done is that a competitive approach, which taps into the commercial market and brings in some modernized commercial systems as candidates, along with VistA-based systems, as well.  We did market research on this, and we had about 20 responses from industry.  Three of them were from VistA-based approaches, and the rest were from other approaches.  So we think we have a rich field to pick from, and we can make a best value determination for DoD. 

            So, on the one hand, we're going to continue the existing program for seamless integrated data records for our people with VA, and we're going to move into a competitive approach for the longer-term modernization of our healthcare management software.  So that's the path we're on. 

            The other decision the secretary made was to ask me to take a more direct role in this program.  I have not had that much of a direct role so far, but he's asked me to step in and try to streamline it and ensure that we deliver this capability as efficiently as possible.  We'll continue to coordinate very closely with VA as we go down this path.  I've been in touch with their leadership in this area, and we'll be meeting shortly to work out some of the details of how we're going to go proceed. 

            And so that's essentially what we're going to do.  And with that, I think I'll take your questions. 

            Q:  Sir, how much is this going to cost, both the short-range one and the long-term portion of it? 

            UNDER SEC. KENDALL:  The short-range aspect to this, the integrated seamless data -- data records, is funded in the '13 and '14 budgets.  And we have funds there.  They're working with that.  We've made quite a bit of investment in kind of the basic architecture, if you will, that's going to support that capability.  And, by the way, as we move forward in modernization, as well, that investment should pay off for us.  We should be able to take advantage of that.

            Going further downstream and into the -- more into the modernization effort, the new -- the upgraded software, if you will, the new software, we're have to going to assess that, okay?  We have -- we have a stream of funding in the budget, and we hope we can do what we need to do within that.  

            One of my next tasks going forward is going to be to understand exactly what's affordable within the budget stream that we have.  You know, modernization is probably going to take place and to some degree at an incremental fashion.  The idea is to have a core set of capabilities.  And as I said earlier, VistA is going to be the basis for the core for VA.  We're going to do a competition out of which we may select VistA or some other software applications into a core capability, and then other modules of capability are added on to that, as you move down the modernization path. 

            So the speed with which we go down that path is probably going to be driven by how much money we can afford to put into this area of the defense budget.  And as you're all well aware, the future budgets for the Defense Department are pretty up in the air right now. 

            Q:  Would it be safe to say, sir -- I'm sorry -- that VistA would have -- would have an advantage?  I mean, anything that DOD does is going to have to interact with VistA going forward. 

            UNDER SEC. KENDALL:  It is.  But once we have the common data standards, we'll be able to interact with VistA or commercial products.  Remember that our people get healthcare not just in DoD and VA hospitals.  We also have to ship health records to commercial hospital, you know, out in the civilian market, if you will, just as seamlessly as we do to a VA hospital between two DoD hospitals. 

            So the whole initiative that the president started was designed to allow that to happen.  And that's the first step, for that reason.  It'll allow us to do this with -- with whoever we have to work with or wherever our people have to go to get healthcare. 

            Q:  Hi, Jared Serbu from Federal News Radio.  Aside from your sort of enhanced role in the governance of this, what's really changed over the past 30 days?  Because it looked like you guys were about to go out with RFPs [request for proposal] with the commercial approach before the secretary stopped?  I mean, what's changed since then? 

            UNDER SEC. KENDALL:  There were some RFPs that were planned for some of the modules that are part of the integrated healthcare management software system.  There was -- we were at a point where we needed to make a decision about which way we were going to go for the core, because that tends to drive the other things that need to be done, and there were some differences of opinion, frankly, about what should be in that core and how we were going to resolve that. 

            So, you know, we have strong cooperation with VA on the interoperability, on the integrated records.  We are not as much in agreement on the best way to modernize.  Now, I should mention that VA has a very different situation than we do.  Their business equation is fundamentally different than ours, because they already have the installed base of VistA and, as I mentioned earlier, they have the trained people and, if they modernize on the basis of the VistA system, they can evolve that and move forward that way. 

            We are not going to try to modernize based on our legacy system, which is called AHLTA [Armed Forces Health Longitudinal Technology Application].  That's a system that has not been maintained.  It is not in a position where we can build on it.  We want to look at a broader range of options. 

            And what we'll do is -- as we go through that process -- is we will evaluate cost, schedule, performance, growth capability, and risk as part of a best value source selection.  And then based on that, we'll pick the best modernization path for us for the core. 

            Q:  If I can go back, also, to the memo from OT&E back in March, which I'm sure you're familiar with, the basic intention was that the department appeared to be headed down a path where it was going to buy a replacement proprietary system for AHLTA, which by its very nature would impede the president's push for open data standards.  Is that the path that you're on? 

            UNDER SEC. KENDALL:  No, it wasn't on my list, but one of the other things, obviously, we have to consider in a best-value equation is the degree to which we're locked into a specific vendor because of proprietary content and his products. 

            So we're very aware of that.  There are a couple of ways to get at that problem.  And as we go out and we ask people to bid to us, that's one of the things we're going to assess.  We do not want to be locked into a specific vendor, you know, for the long-distance future. 

            Q:  If I could... 

            UNDER SEC. KENDALL:  You could. 

            Q:  ... for the folks -- for a soldier who's been in for 20 years, he's got 20 years' worth of medical records.  Now, you're going to have a new system.  Will all of those 20 years of medical records be in this new system, too?  I mean, will he have to have -- will he have to worry about having two sets of records? 

            UNDER SEC. KENDALL:  No.  The whole idea here is to have a single, integrated record.  The record is the data.  And once we add that data into the standardized formats and so on, and we have converted the material that we have now into that -- that -- I'll call it architecture, then we're positioned to do whatever we need to do after that, whatever software we buy, whoever we move that data to.  So that's the vision that we're moving toward.  That's what the president set out in his goals for nationally -- for common healthcare standards for data. 

            Q:  That would also make it a lot easier for servicemembers... 

            UNDER SEC. KENDALL:  It'll be make -- make it better for soldiers.  It'll be much better for clinicians.  The other thing that's happening in -- in this field that's relevant here is that the software that's used by healthcare providers is improving.  It's evolving, and VA is not going to stick with their current VistA.  They're going to go to a more capable version of that. 

            We will do -- we would look for more capability by far than exists in our current system.  And one way to put it, I think, is that healthcare management software is getting smarter.  You know, there's a market for this out there.  We got 20 responses, I mentioned, when we asked industry for people who'd be interested in bidding to us.  And they're competing with each other, so we want to take advantage of that market.  We want to tap into that. 

            And what they're competing with each other for, in part, is their efficiency in price and so on, but also the functionality, the capability that's in their software.  So things like -- one easy one that's not difficult to do is de-conflicting drugs, for example, making sure that your drugs that are in your -- that you're taking are compatible. 

            But beyond that, there are things that provide assistance to physicians, like tracking over time certain indications in your -- from labs or from whatever measurements that are being made on the -- on the patient.  So you can see trends and you can draw inferences from that. 

            So we'd like to position ourselves to take advantage of additional advances in terms of the functionality that'll be in software in the future.  And that will be a factor and the best value determination. 

            Q:  I want to make sure I understand the sort of two-track approach, as far as the acquisition strategy.  Are you at a point where you have a detailed or semi-detailed roadmap for when RFPs, et cetera, are going to go out on... 

            UNDER SEC. KENDALL:  That's my next job.  The secretary said I'd like your recommendations, now I want you to take responsibility for making sure this happens.  So what I'll be doing in the next few weeks is getting together with our team and also with the VA and laying out a more detailed plan going forward.

            Q:  If I can ask another boring organizational chart question, I mean, what -- what exactly is your role?  Do you step in to sort of what DCMO [deputy chief management officer] was doing?  Or is their role changed? 

            UNDER SEC. KENDALL:  No, DCMO will still be very involved in this.  Beth McGrath and I work closely together on it.  I would liken it in some ways to the -- what's in our normal system, the program executive officer role.  But it's going to be -- it's going to be tailored to this particular problem.  It's very important that we get this right upfront. 

            You know, I've been around a lot of business systems of different types, and when people rush to do things and make decisions quickly early, you tend to get into very big trouble later on.  So getting this right upfront, setting this up so that the -- whatever we put out in the RFP is written well, the evaluation criteria are the ones we want, we define value the way that makes the most sense to us, and we incentivize industry and we protect ourselves from kind of the proprietary lock-in that you talked about, all those things have got to be thought through and put into the source selection for modernization going forward.  So there's quite a bit of work to do there, and we've got to get that right.  And if we don't get that right, we'll end up in trouble downstream. 

            LT. COL. MORGAN:  We have time for one last question. 

            Q:  Can I have it or... 

            Q:  Go ahead. 

            Q:  Before you reached this decision point, I mean, did -- did you confer extensively with VA and kind of get their signoff and get them to say, yeah, we think this is workable, we can interoperate with the approach you're taking? 

            UNDER SEC. KENDALL:  We're committed to interoperability, although we tend to use the word integrated records instead now, because of some baggage associated with that.  And VA understands that.  We have been working together with them.

            We have agreed to the basic approach.  I think, in an ideal world, they would have preferred that we simply, you know, go along with them, but we don't -- we may end up there.  When we do the source selection, we may end up with a VistA derivative and be -- be more common in software.  But it's a little bit like e-mail.  We don't have to use the same e-mail system to send e-mails to each other, you know?  We're both very large organizations with a lot of cultural differences and so on.  And we have to make sure that our people are brought on board and are comfortable with the product that we're going to acquire here.  And so does VA, right? 

            And it's a little different journey for the two of us.  We have not had good success in the department even internally trying to do very large-scale software systems or business systems across the military services, across the military departments.  So I think this path, I think, frankly, has a higher chance of success than if we tried to force ourselves together into a single solution and negotiate every single detail of that.  I think that's -- that's a very difficult path to tread. 

            LT. COL. MORGAN:  Thank you, everyone. 

            UNDER SEC. KENDALL:  We're done?  All right.  Thanks, everybody.