Girard Medical Center, a rural hospital in Kansas which services mainly uninsured patients and the elderly, wanted an electronic medical record system to better share information with its clinic offshoots and to claim federal incentives. But a year-and-a-half and more than a million dollars later, the hospital says it’s no closer to having electronic medical records, and is blaming its vendor for the failure of the project.

Whether the fault for the failed project should rest on the big corporate vendor or the small hospital is unclear. But Girard’s story illustrates the risks for organizations of all kinds when they attempt to innovate by bringing in new, and unfamiliar, technologies and vendors.

The hospital brought in Cerner Corporation in September 2010, one of the biggest vendors of electronic medical records, to provide an all-in-one fix that would allow doctors to prescribe medicines and order tests electronically, and for administrators to fulfill HR functions like tracking time and attendance. But the hospital claims that instead of Cerner “providing one throat to choke,” the company provided “many products to buy,” said Frankie Forbes, an attorney for Girard.

According to a complaint filed in U.S. District Court in Kansas City by Girard, Cerner raised its charges, instead of doing all the work for the original price, and then abandoned the project when Cerner complained and eventually suspended payments. The 25-bed rural health-care provider claims in a lawsuit that despite paying Cerner more than $1.2 million in fees, it still has no electronic medical record system and still doesn’t qualify for federal monies to pay for one. A spokeswoman for Cerner, in an email, declined to comment. The case is now in court-ordered arbitration.

“We just kept running into things that weren’t included,” in the original $2.9 million price tag the hospital initially agreed to pay, said Holly Koch, the hospital’s chief financial officer. “They weren’t holding up their end of the bargain.”

But Koch and other hospital officials also acknowledge that neither they nor the board had a complete understanding of the contract on which they signed off.

“It was incredibly complex and difficult to understand,” Koch said. “We relied on them to explain to us what the contract represented.”

Koch and board members say they relied on a presentation in Fall 2010 from Cerner which promised a “fully integrated” patient records and administrative system. That presentation was included by Girard with its complaint and has been reviewed by CIO Journal.

After initially promising these features were included in the $2.9 million price, Cerner later told the hospital that attendance-tracking features, lab test functions, and electronic billing would increase Girard’s annual costs, for the five year contract, by around $100,000, according to Mike Payne, CEO of Girard.

After failing to reach an agreement last summer over pricing, Payne said he began to stop paying invoices from Cerner.

“I didn’t see any way to get where we wanted to go unless I got their attention,” Payne said.

The hospital did get Cerner’s attention: in September 2011 a Cerner employee emailed administrative staff to say they were walking away from the project, according to the complaint.

Girard’s tale illustrates the inherent risk as health-care providers of all sizes move towards implementing electronic medical records. While hospitals are eager to pick up some of the $19 billion in funds the Obama Administration made available in 2009 as part of the stimulus package, they often lack the in-house expertise to contract with and supervise vendors on the complex implementation of records systems.

“Health-care systems are putting in these systems with all due haste to try to get this money,” said Dave Garets, executive director of the Advisory Board Company, a health-care research firm. “But you’ve got to have the people in-house who really understand this process and these people don’t come cheap.”

The federal government predicts a shortage, by the year 2015, of 50,000 healthcare IT specialists, like healthcare informaticists and chief medical information officers -- the type of experts that would have helped Girard to manage the implementation of its electronic records system.

Any company hiring outside IT vendors faces this type of risk, said Chris Andrews, an analyst at Forrester Research. Companies often look for the best quote for a new technology product, but fail to allocate enough internal staff to supervise the process.

“There is an unrecognized cost to just making any relationship work,” said Andrews.

When Girard hired Cerner, the hospital had just two IT staff members – neither with a specialty in electronic medical records, said Koch.

Payne, Girard’s CEO, says he has since brought in an outside “vendor neutral” consulting firm to help the hospital make an unbiased decision on what’s next for the hospital's EMR program.

“It means swallowing your pride and knowing what you don’t know and finding someone who does know it,” said Payne.