Cost of County Health Records Project Balloons

A contract for a new electronic records system for county mental health patients appears to be ballooning in size, with the Orange County Board of Supervisors set to approve a contract change Tuesday that nearly doubles the original cost estimate for the next phase.

When county Health Care Agency officials sought approval for the first phase of their contract with Cerner Corp. in 2012, they showed – both in their staff report and their presentation – a second phase price tag of $796,000 for the company’s work.

That cost is now $1.5 million, under a proposed change to Cerner’s no-bid contract that’s on the supervisors’ meeting agenda.

The staff report doesn’t explain the increase, or acknowledge the discrepancy.

In a phone interview Monday, the project’s manager attributed the difference to new services provided by Cerner that weren’t originally anticipated, as well as the transfer of some tasks from the third phase to the second.

“Over the last two and a half years many things have changed. Compliance requirements have changed, our own internal need to implement certain things have changed,” said Adil Siddiqui, the Health Care Agency’s technology director.

“[The] overall project cost is still within the overall plan.” he added.

Siddiqui also pointed out that the funding is through the state-administered Mental Health Services Act – which is a 1 percent tax on income over $1 million – as opposed to county general fund dollars.

“It’s not county money,” he said.

About 60 percent of the cost increase was broken down by Siddiqui, including $196,000 for a new web-based interface developed by Cerner and $70,000 for extra data storage.

Siddiqui pointed to several more products and services would be provided by Cerner under phase two that weren’t factored into the original projection. But he declined to provide a breakdown of those costs.

“I don’t have that readily available at this time where I feel it is fully accurate or final,” Siddiqui said.  “I have to validate this with staff before it can be provided to you.”

The system, officially known as the Integrated Records Information System, is aimed at upgrading county systems to new federal and state requirements and help psychiatrists to provide better care.

It’s supposed to integrate patients’ health information – including medical history, lab results, and diagnosis suggestions – all in one place.  This would, among other things, help the county in filing claims for reimbursement from the federal government.

The timeline for the project has also fallen behind the original plan.

While the second phase was supposed to begin in the current fiscal year, that didn’t end up being the case.

The county’s quarterly IT update for late last year said the second phase would start in the first quarter of 2015.

The next report pushed it back to the second quarter.  Now it’s not slated to start until the third quarter, at the earliest.

It “took a little bit longer than we thought,” Siddiqui said, attributing the delay to rolling out the software at additional clinics than expected.  “We didn’t want to compromise” the county’s services.

“There is no requirement that we have to meet certain dates,” he added.

The total project cost, for all three phases, was projected at $22.9 million in the original staff report.

When the first phase came before supervisors in 2012, they showed concern about cost overruns on IT projects, particularly regarding Cerner.

“We’ve had a past experience with Cerner that was not pleasant,” added then-Supervisor Bill Campbell.

In the 2000s, the company delivered a faulty $11 million system to the county, prompting county officials to withhold over $1 million in payments to the firm, according to the Orange County Register.

During the 2012 discussion of Cerner’s first phase, Supervisor Pat Bates said she and her colleagues were trying to avoid the types of “huge cost overruns” they had seen in the past, “which are very difficult to build back into our budget.”

The first phase, meanwhile, was very successful, Siddiqui said.  It came in on time and under budget, with no performance problems at all by Cerner.

This is a “project that we actually brag about,” he said.  “This is how a project should be run.”

You can contact Nick Gerda at ngerda@gmail.com, and follow him on Twitter: @nicholasgerda.