Epic Systems software

Mother Jones wrote about Verona-based Epic Systems in its latest issue.

Epic Systems Corp., Verona, has lost out on a huge, multi-year, multibillion-dollar contract to update electronic health records for the U.S. military.

The Department of Defense on Wednesday named Leidos, of Reston, Virginia, the winner of a $4.3 billion, 10-year contract.

Epic competitors Cerner and Accenture will be working with Leidos.

The decision is an opportunity to “save money, save time and most importantly, save lives,” said Christopher Miller, executive officer of the Defense Healthcare Management Systems.

The entire Defense Department’s 9.5 million beneficiaries will be affected.

An Epic spokesman, reached Wednesday evening, said the company is not commenting on the decision at this time. Epic officials are “processing” the news, spokesman Shawn Kiesau said in an email exchange.

Epic and IBM had submitted a joint proposal for the massive contract and were considered one of the lead contenders, according to industry observers.

Six bids were submitted, Defense Department spokeswoman Maureen Schumann said.

The Epic/IBM duo was among the top three bidders, according to Healthcare IT news.

But neither Epic nor IBM may have had the long record of experience with the military that Leidos has.

The Leidos Partnership for Defense Health has partnered with the military health system for nearly three decades, Leidos spokeswoman Jennifer Gephart said, in an email exchange.

“We are committed to continuing our work in support of its mission to improve the health and medical readiness of our military,” she said.

Even so, speculation was rampant among observers that Epic and IBM would be chosen. As recently as Monday, HIStalk, a health tech blog, posted a comment from a reader guessing that a military official may have “spilled the beans” on the selection by saying the department is working on electronic health records infrastructure in the Pacific Northwest, the same region where Epic and IBM are installing a system in Tacoma, Washington.

In announcing the decision Wednesday, Frank Kendall, Undersecretary of Defense for Acquisition, Technology and Logistics, indicated a big factor was to limit changes in the current electronic health records system.

“Market share was not a consideration,” Kendall said. “We wanted minimum modifications.

“The trick ... in getting a business system fielded isn’t about the product you’re buying, it’s about the training, the preparation of your people, it’s about minimizing the changes to the software that you’re buying,” Kendall said. “We’ve done a lot of work to ensure that our users ... are prepared to take on this product and use it.”

He said Leidos will pilot the system at eight locations in the Pacific Northwest late next year with plans to have it installed at 1,000 locations by 2022.

The contract, expected to run 18 years, was initially projected to be worth $11 billion, but is now estimated at under $9 billion.

“Competition has worked for us,” Kendall told reporters.

Epic’s health records programs cover more than half of the patients covered by health care systems nationwide.

Privately owned Epic, founded in 1979, has about 8,000 employees and reported $1.8 billion in revenues in 2014. It is the largest private employer in Dane County.

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Judy Newman is a business reporter for the Wisconsin State Journal.