A Department of Veterans Affairs Office of Inspector General audit found that the Veterans Health Administration underestimated the price of its electronic health records modernization project to the tune of billions of dollars.

The report, released earlier this week, noted that the preparation for the installation of the Cerner EHR in VA facilities required important physical infrastructure upgrades, such as electrical work, cabling, heating, ventilation and cooling.  

Although VHA developed two cost estimates for all those necessary updates, the OIG team found that these estimates were not reliable.    

“To be reliable, the quotes should be comprehensive, well documented, accurate and credible, ” wrote the OIG team in its report.    

“Neither quote reviewed completely met these four characteristics. ”  


The OIG audit found that formal cost estimates “differed significantly” from a higher draft estimate that relied on more detailed info.  

In actuality, its team projected that the VHA’s two formal estimates for infrastructure costs may be off by as much as $1 billion and $2.6 billion.  

“The OIG team found that many factors contributed to the lack of reliable estimates, including an independent cost estimate wasn’t completed as required by VA financial policy, ” noted the report.  

It pointed to insufficient planning at the start of the program. It was’t until six months after the onset of the contract award to Cerner, for example, that key VHA staff were “first made aware” of a need for physical infrastructure updates.  

” Only in November 2019 did [the Office of Electronic Health Record Modernization] and VHA agree on a first set of infrastructure requirements, and as of January 2021, requirements continued to be defined, ” read the report.  

The group also discovered that OEHRM didn’t include the VHA-provided $2.7 billion estimate for physical infrastructure upgrade costs in the life cycle cost estimate it reported to Congress.  

“The costs associated with these updates should happen to be transparently disclosed to Congress as part of the applications life cycle cost estimate to help alleviate members cost uncertainty concerns and advance meaningful oversight and budgeting of the program, ” read the report.  

The OIG made five recommendations:  

  1. OEHRM’s executive director should make sure an independent cost estimate is performed for program life cycle cost estimates.  
  2. VA’s assistant secretary for management and chief financial officer should make sure this independent cost estimate of EHRM program life cycle cost estimates is performed.  
  3. VHA’s director of special engineering projects for the Office of Healthcare Environment and Facilities Programs should develop a reliable cost estimate for physical infrastructure upgrades according to VA cost-estimating standards.
  4. That manager should also always update physical infrastructure cost estimates based on emerging requirements and identified project needs.
  5. OEHRM’s should disclose the prices for physical infrastructure upgrades funded by VHA or other resources in its life cycle cost estimates presented to Congress.  

The OIG team noted that OEHRMs executive director, VAs assistant secretary for management and chief financial officer and VHAs acting under secretary for health concurred with the recommendations and provided action plans with target completion dates within 12 months.


The VA’s EHR modernization initiative was hindered by delays and accidents during the last year.

Even though the COVID-19 pandemic certainly didn’t help things , the VA had already announced that it planned to postpone its Cerner rollout in February 2020.

Then, following its October 2020 rollout at the Mann-Grandstaff VA Medical Center in Spokane, Washington, triggered stakeholder concerns, the agency said it would not move forward with a go-live in a second site in Columbus before a strategic review was completed.  

It is not clear whether these delays will lead to the price underestimations outlined in the OIG report.  


“Reliable cost estimates for these updates are imperative to ensuring that Congress has the information needed to make informed budgetary and investment choices, ” wrote the OIG in its report.    

“Within VA, senior leaders rely on quotes to program program budgets, conduct acquisition activity, and monitor program execution. For all these reasons, reporting all program-related expenses and ensuring cost quotes are reliably developed [are] critical to the program’s success. “


Kat Jercich is senior editor of Healthcare IT News.
Twitter: @kjercich
Email: kjercich@himss.org
Healthcare IT News is a HIMSS Media publication.

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