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, and follow him on Twitter: @nicholasgerda.

  • OCservant_Leader

    Apparently – the former Director of Mental Health who initially approved the Cerner contract and managed the MHSA funds for years before her protege Refowtiz took over…came out of retirement (code word getting her “40 quarters”) to run the “recruitment” for new Health Care Contracts Manager last Fall. Why there was a recruitment – I don’t know.

    She selected Frank Kim’s sister. That’s how she was hired from the “outside”. This was before Frank Kim took over as CEO…so you can see how they work in advance behind the scenes.

    Why would they need to bring the former Mental Health Director out of retirement (@$200/hour) to do this for her friend -former mental health & current agency Director Refowitz?

    Could it be that 90% of Health Care contracts involve MHSA funds that she was responsible for? Does she want to ensure certain contractors keep getting funded? Or is there something to hide?

    Maybe guarantee the Cerner contract continues and the talking head does his job?

    She then stayed on for months to “train” CEO Frank Kim’s sister & new Finacial Director (EA) in her process?

    Isn’t that a conflict of interest considering she approved all MHSA Contracts for more then a decade?

    I don’t like the smell of this incestuous little group controlling so much money.

  • OCservant_Leader

    Since this special “relationship” between contractor and government officials involves 100% MHSA funds…maybe this will peak the AG’s interest?

    This isn’t mismanagement. I’m talking about organized crime. Well orchestrated right from the Board of Sups. isn’t the Healthcare Finacial Dirctor an EA too? Sure makes it easy.

    How has the mentally ill benefited from close to a Billion dollar infusion of MHSA in OC? (Reminds me of what the homeless at the Civic Center and the poor animals at the shelter got….not even a bone)!

    A lot of individuals have become very wealthy with the MHSA funds. Follow the money.

    That is a tight group who have hands in that money. The retirees keep close watch on who can be promoted and gain access to info. Of course they need their contracts continued as well–to get their “40 quarters”.

    A Billion is a lot of money. That’s why you need people you can trust…like family —like Frank Kim’s sister. She is uniquely qualified. Now I see why he put her in Healthcare.

  • OCservant_Leader

    The difference is public corruption…is a CRIME.

    Private sector poor management is just that. Making a profit off of personal connections is called “business”.

    SELF-ENRICHMENT with tax dollars is called “Graft”.

    Nice try tho.

    • KateD

      You nailed it right on the head. They are already making money hand over fist on patients in long term care, that has been well documented for over a decade. The DA has known and never acted on it. Now, this? They will clean up, putting millions of dollars stolen from us all into their pockets. Disgusting, and criminal!

  • Smeagel4T

    This stuff isn’t unique to government. I’ve been involved in system upgrade deals at major banks. None of them ever managed to come close to being on time or being on budget. There’s probably one in 100 organizations that have successfully been on time and on budget with any major systems installation/upgrade. It takes somebody who is actually very competent and with a ton of authority to force both sides of the deal to stay organized and focused on clear cut goals. Those conditions hardly ever exist in either public agencies or private corporations. Anybody who pretends this is anything unique about government simply is not being honest about having any major experience with a number of these types of deals in the private sector.

  • OCservant_Leader

    OC Contractor Scam: Hire Cerner staff ON at County as well to ensure 2M checks keep coming annually. This was the wrong system -day one (designed for a hospital…OC does not have a County hospital) oops.

    Everybody takes a cut to make sure the corporate welfare continues. He is packaged as a “dedicated public servant managing a contractor”…except he actually works FOR the contractor!

    The talking head appears annually before the BOS to take a public flogging & does his dog-n-pony show with power points & spread sheets with funny numbers and promises they CAN make this system work – they just need more money.

    This contract is personally managed by…who? CEO Frank Kim’s sister oh and Budget Manager Steve Franks wife at Health Care…because it is “special”.

    The scam will run until they pull the plug on boondoggle- by then talking head and wife (yes she came with package) will retire after 10 years and collect checks from taxpayers until their deaths..meanwhile go right back working for contractor. Either way he is getting paid by both contractor & County times two for wife.

    This is how you get rich in the OC. It is the oldest scam in the world–keep those tax dollars depositing into your family’s bank account. In this case -this dynamic duo is pocketing close to half a million a Year? Their only job? Keep this contract going.

    Protected by CEO & BOS and the other “super couples”. Winning!

  • OCTaxpayer

    Xerox is an even more serious issue. This County is suffering because of a foul contract. Word has it that no financials have been provided by Xerox.
    Whats up with that?
    Cost overruns Cost overruns.
    I also hear that there are issue with IT infrastructure costs such as cabling, conduit and electrical. Is there not oversight?