Warnings of $100M Overpayment Prompt Recommendation to Void Contract

One month after NBC 5 Investigates reported allegations that the University of Illinois Hospitals had entered into a mammoth software contract which would potentially incur as much as $100 million in implementation costs, a state board declared today that there was evidence of a conflict of interest on the part of a major vendor, which would require that the contract be voided.

The matter was referred to the state’s Executive Ethics Commission for further investigation.

The controversy concerns U of I’s efforts to purchase sophisticated software for billing and medical records systems. After the contract was awarded to Epic Systems, losing bidder Cerner Corporation warned that the Epic decision would result in tens of millions of dollars in overpayments by Illinois taxpayers.

“I smell a rat here,” Cerner attorney Mara Georges told NBC5 last month. “The taxpayers of the State of Illinois are entitled to an explanation, and an explanation has not been forthcoming.”

At issue, what was supposed to be an all-encompassing contract, Georges argued. And she said Cerner provided that in their bid for $60.5 million.

Georges said Epic’s $62 million dollar bid would require separate implementation costs which would add another $75 to $100 million.

At Tuesday’s meeting, Georges cited internal documents which she said showed another company, Impact Advisors, had extensive input on the planning for the contract, only to offer its services for implementation after the award to Epic.

“Clearly Impact Advisors was involved throughout, and at every step,” Georges told the Procurement Board. “And then Impact Advisors came back on the back end of the process and sought to obtain additional business through implementing the Epic system.”

Georges went so far as to declare that Impact had “tainted the process”.

“They had a conflict of interest,” she said. “They had a financial interest in insuring that Epic was the successful awardee.”

Members of the board agreed they were uncomfortable with the way the contract had been awarded.

“This isn’t your money, it’s not my money, it’s the taxpayers’ money,” board member Bill Black declared. “We’re trying to figure out if the taxpayer gets the best value for his or her dollars.”

The Chief Procurement Officer had argued to the board that there would be high implementation costs no matter who received the contract. Chief Information Officer Audrius Polikaitis said the cost of replacing over 5,000 work stations alone would run over $6 million.

“There is a lot of gray area around this,” he said. “We will largely face these same costs regardless of the software vendor we chose.”

Procurement Officer Ben Bagby said his review of the matter suggested Cerner’s proposal did not score high enough by an independent evaluation committee.

But the pushback from the University fell on deaf ears. The Procurement Board voted to send the matter to the Illinois Executive Ethics Commission for a public hearing, expressing a belief that such a conflict existed that the contract would have to be voided.

“Something’s wrong here,” Black declared.

An Epic spokesman noted that UI Health has previously used both Epic and Cerner, choosing Epic for this latest contract.

“We believe that organizations have a right to choose the solution they feel best meets their needs,” spokesman Meghan Roh said in a statement. “It’s unfortunate that a case of sour grapes is preventing that from happening.”

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