Epic responds to UI Health dispute, says total costs were $3M less than Cerner's

Epic CEO Judy Faulkner says the $62 million contract with UI Health was fair, and total costs came in below Cerner's. (UIHealth)

Epic is defending itself against a challenge to its $62 million contract with the University of Illinois Hospital & Health Sciences System (UI Health), arguing the bidding process was fair, and the total price came in several million dollars below Cerner’s bid.

In a letter to the State of Illinois Procurement Policy Board obtained by FierceHealthcare, Epic CEO Judith Faulkner said a protest filed by Cerner fails to identify any conflict of interest that would have prompted UI Health officials to favor Epic.

“There is nothing in the record to suggest any conflict of interest or improper conduct,” she wrote in the letter dated May 16. “Therefore, the award of the contract should stand.”

According to the letter, Cerner’s $60.5 million bid came in below Epic’s $62 million bid. But UI Health’s total expected costs for Cerner’s system—accounting for additional staffing, new hardware and third-party software—would reach $154 million, $3 million more than the total cost to implement Epic’s system.

In its protest, Cerner said it’s “all-in” bid was lower than Epic’s.

“The supposed cost difference Cerner has often pointed to simply doesn’t exist,” Faulkner wrote.

Cerner has also raised concerns that Impact Advisors, a consulting firm that began working with UI Health in 2014 to implement IT projects, would benefit if the system chose Epic since the two companies have worked closely on other projects.

Faulkner refutes those claims, arguing that no one from Impact Advisors served as an evaluator of the EHR proposals, and the evaluation committee was composed of 17 “highly respected staff.” She added that Epic made “no promise or arrangement to compensate Impact Advisors or any other firm” and that UI Health has been “crystal clear” that it would need staff augmentation services regardless of who is awarded the contract.

She called Cerner’s position that Impact Advisors would benefit a “hypothetical future situation” in which UI Health selects Impact Advisors to assist with the project.

“If these stars align, Cerner has asserted that Impact Advisors might stand to benefit from the implementation of Epic’s solution,” Faulkner wrote. “At this stage, it is uncertain whether Impact Advisors would submit a response to such an RFP or if UI-C would award any portion of such a contract to Impact Advisors.”

Faulkner also argued the company is a better choice than its rival since 89% of people in Illinois are cared for by health systems that have or are installing Epic as their EHR.

A Cerner spokesperson did not immediately return a request for comment. 

The dispute dates back to last fall when UI Health tapped Epic to replace its 20-year-old legacy system. Cerner quickly filed an appeal with the state's Chief Procurement Office for Higher Education, alleging the bidding process was unfair.

The procurement office denied the protest, but Cerner appealed the decision to the Illinois Policy Procurement Board. Last month, the board recommended UI Health void the contract and forward it to the state ethics commission.

“Something’s wrong here,” said Bill Black, a member of the Illinois Procurement Policy Board, according to a transcript of the board's hearing last month. “I’m not completely comfortable saying there is a conflict of interest, but there certainly may be, and perhaps a hearing before the executive ethics commission could shine more light on this matter than what we’re able to do."