From the Procurement Insights Proprietary Archives:
Key Lessons from the VHA Setback:
1. Massive Scale of Failure:
- $16 billion contract (originally $10B, renegotiated multiple times)
- 7 years in, only 6 of 170+ medical centers operational
- Contributed to patient harm and 4-6 veteran deaths
- 150+ patients harmed
- (2018) Project suspended indefinitely in 2023, recently restarted**
**The Connection: Both failures demonstrate the same pattern – technology-first approaches without proper organizational readiness assessment, but they’re separate procurement disasters spanning two decades. This actually makes the case for the Hansen Method even stronger: the VHA learned nothing from Bay Pines and repeated the exact same mistakes 14 years later with an even larger investment.
2. Classic Technology-First Approach Failures:
- Focused on feature compatibility with DoD rather than VHA operational reality
- 11,000+ clinical orders routed to “unknown queue” at first site
- No proper organizational readiness assessment
- Vendor-driven implementation timeline
3. Agent Behavior Misalignment:
- User satisfaction “critically low”
- Training and change management “woefully inadequate”
- Staff resistance and workflow disruption not anticipated
- Pharmacy and scheduling modules failed basic user needs
4. Process Archaeology Never Conducted:
- No understanding of how VHA workflows actually functioned
- Failed to identify timing patterns in clinical operations
- Ignored exception handling and workaround processes
Hansen Method Validation: This case demonstrates exactly why the Hansen Method’s “ProcureTech implementation insurance” is essential. The VHA failure represents the 80% failure pattern – technology selection without organizational readiness assessment, agent behavior analysis, or process archaeology.
The $16 billion loss could have been prevented with proper methodology applying process-first thinking rather than technology-first implementation.
Key Takeaway: The VHA case study is a definitive example of why procurement transformation requires a capability-first methodology rather than technology-first approaches.
ADDED THOUGHTS (ACTUAL NEWSPAPER ARTICLE – JULY 28, 2004)
VA Drops Problematic Computer System
VICKIE CHACHERE The Associated Press
TAMPA — The Department of Veterans Affairs is scrapping an experimental $265 million computer system at Bay Pines Veterans Affairs Medical Center because it delayed surgeries, prompted congressional investigations and led to the resignation of several top officials.
Secretary of Veterans Affairs Anthony J. Principi said in a statement Tuesday that the agency is phasing out the Bay Pines test of the Core Financial and Logistics System, which was intended to integrate the hospital’s services with its inventory, budgeting and planning programs.
The pilot project was intended to see how the system worked before it was expanded to the rest of the VA system, which would have cost taxpayers an additional $207 million.
Principi said Bay Pines would return to its previous computer system in October. Principi said a committee of senior VA officials will make recommendations about the remainder of the program’s future.
An agency spokesman said Tuesday he could not say whether any of the money spent on the failed system would be recovered.
Five VA officials have quit or been reassigned since February due to problems at Bay Pines. Hospital employees were not fully trained in the system, and difficulty in using it led to suppliers not being paid, a shortage of surgical supplies and delays for some surgeries.
The computer system was installed last fall at Bay Pines as the first test site. Bay Pines, which serves some Polk veterans, is the fifth busiest hospital in the VA system, and officials later conceded they never should have tested the system there.
Congressional investigators found the contractor awarded the contract, BearingPoint, was paid more than $200,000 as an incentive bonus for keeping the Bay Pines computer project on schedule even though employees were not properly trained to use it. BearingPoint officials declined comment Tuesday.
The trouble at Bay Pines came at a time when the hospital is experiencing huge growth in its number of patients and now cares for more than 70,000 patients a year.
U.S. Rep. C.W. Bill Young, RLargo, who had been monitoring the VA’s handling of the system, told the St. Petersburg Times that the agency will continue to test the experimental computer system in a “controlled environment . . . to see whether it has any value to the VA system.”
U.S. Sen. Bob Graham, D-Fla., who held hearings on the computer system at the hospital in March, was angered by the outcome, the Times reported in its Tuesday edition.
“At a time when VA’s health care system is stretched to the limit, it is outrageous — simply outrageous — to waste millions upon millions of dollars on a failed computer system,” he said.
U.S. Sen. Bill Nelson, D-Fla., said in a statement Tuesday he has serious concerns about the system since a visit to Bay Pines earlier this year and now wants to know what steps are being taken to recover the money spent on the system.
TODAY’S TAKEAWAY
These links reveal that the VHA’s problems run much deeper than just another debacle Oracle/Cerner debacle – this is a 20-year pattern of procurement transformation failures that perfectly validates the Hansen Method approach:
From the 2012 Procurement Insights Archive – Critical Hansen Method Validation:
The Earlier VHA Failure (1997-2004): $650 million JD Edwards and Oracle implementation spanning 7 years before being scrapped
Life-and-Death Process Archaeology Failures: “Failed conversion of inventory data” resulted in canceling surgeries due to lack of critical medical supplies – This is exactly what process archaeology would have prevented by mapping real operational workflows.
Agent Behavior Misalignment Pattern: Decentralization created VISNs with their own CIOs/CFOs, then attempted re-centralization – “wresting power from departments who are used to calling the shots is a virtual impossibility”
The Hansen Method Lesson: The VHA case represents a 20-year, $650M + $16B = ~$17 billion procurement failure pattern across multiple technology implementations. This demonstrates:
- Technology-first approaches consistently fail regardless of vendor (JD Edwards, Oracle, Cerner)
- Organizational readiness was never assessed – the decentralization/re-centralization chaos shows fundamental misunderstanding of agent behaviors
- Process archaeology was never conducted – inventory management failures that canceled surgeries could have been prevented
- The stakes couldn’t be higher – veteran healthcare, not just business efficiency
The VHA story spans two decades and nearly $17 billion in failed procurement transformations, making it the ultimate case study for why “ProcureTech implementation insurance” is essential. The human cost (canceled surgeries, patient harm) elevates this beyond financial failure to a moral imperative.
30
BONUS COVERAGE
Procurement Insights
What Can We Learn From The VHA Bay Pines Debacle, And Why We Should Never Forget Its Lessons (Yet Do).
Posted on September 14, 2025
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From the Procurement Insights Proprietary Archives:
Key Lessons from the VHA Setback:
1. Massive Scale of Failure:
**The Connection: Both failures demonstrate the same pattern – technology-first approaches without proper organizational readiness assessment, but they’re separate procurement disasters spanning two decades. This actually makes the case for the Hansen Method even stronger: the VHA learned nothing from Bay Pines and repeated the exact same mistakes 14 years later with an even larger investment.
2. Classic Technology-First Approach Failures:
3. Agent Behavior Misalignment:
4. Process Archaeology Never Conducted:
Hansen Method Validation: This case demonstrates exactly why the Hansen Method’s “ProcureTech implementation insurance” is essential. The VHA failure represents the 80% failure pattern – technology selection without organizational readiness assessment, agent behavior analysis, or process archaeology.
The $16 billion loss could have been prevented with proper methodology applying process-first thinking rather than technology-first implementation.
Key Takeaway: The VHA case study is a definitive example of why procurement transformation requires a capability-first methodology rather than technology-first approaches.
ADDED THOUGHTS (ACTUAL NEWSPAPER ARTICLE – JULY 28, 2004)
VA Drops Problematic Computer System
VICKIE CHACHERE The Associated Press
TAMPA — The Department of Veterans Affairs is scrapping an experimental $265 million computer system at Bay Pines Veterans Affairs Medical Center because it delayed surgeries, prompted congressional investigations and led to the resignation of several top officials.
Secretary of Veterans Affairs Anthony J. Principi said in a statement Tuesday that the agency is phasing out the Bay Pines test of the Core Financial and Logistics System, which was intended to integrate the hospital’s services with its inventory, budgeting and planning programs.
The pilot project was intended to see how the system worked before it was expanded to the rest of the VA system, which would have cost taxpayers an additional $207 million.
Principi said Bay Pines would return to its previous computer system in October. Principi said a committee of senior VA officials will make recommendations about the remainder of the program’s future.
An agency spokesman said Tuesday he could not say whether any of the money spent on the failed system would be recovered.
Five VA officials have quit or been reassigned since February due to problems at Bay Pines. Hospital employees were not fully trained in the system, and difficulty in using it led to suppliers not being paid, a shortage of surgical supplies and delays for some surgeries.
The computer system was installed last fall at Bay Pines as the first test site. Bay Pines, which serves some Polk veterans, is the fifth busiest hospital in the VA system, and officials later conceded they never should have tested the system there.
Congressional investigators found the contractor awarded the contract, BearingPoint, was paid more than $200,000 as an incentive bonus for keeping the Bay Pines computer project on schedule even though employees were not properly trained to use it. BearingPoint officials declined comment Tuesday.
The trouble at Bay Pines came at a time when the hospital is experiencing huge growth in its number of patients and now cares for more than 70,000 patients a year.
U.S. Rep. C.W. Bill Young, RLargo, who had been monitoring the VA’s handling of the system, told the St. Petersburg Times that the agency will continue to test the experimental computer system in a “controlled environment . . . to see whether it has any value to the VA system.”
U.S. Sen. Bob Graham, D-Fla., who held hearings on the computer system at the hospital in March, was angered by the outcome, the Times reported in its Tuesday edition.
“At a time when VA’s health care system is stretched to the limit, it is outrageous — simply outrageous — to waste millions upon millions of dollars on a failed computer system,” he said.
U.S. Sen. Bill Nelson, D-Fla., said in a statement Tuesday he has serious concerns about the system since a visit to Bay Pines earlier this year and now wants to know what steps are being taken to recover the money spent on the system.
TODAY’S TAKEAWAY
These links reveal that the VHA’s problems run much deeper than just another debacle Oracle/Cerner debacle – this is a 20-year pattern of procurement transformation failures that perfectly validates the Hansen Method approach:
From the 2012 Procurement Insights Archive – Critical Hansen Method Validation:
The Earlier VHA Failure (1997-2004): $650 million JD Edwards and Oracle implementation spanning 7 years before being scrapped
Life-and-Death Process Archaeology Failures: “Failed conversion of inventory data” resulted in canceling surgeries due to lack of critical medical supplies – This is exactly what process archaeology would have prevented by mapping real operational workflows.
Agent Behavior Misalignment Pattern: Decentralization created VISNs with their own CIOs/CFOs, then attempted re-centralization – “wresting power from departments who are used to calling the shots is a virtual impossibility”
The Hansen Method Lesson: The VHA case represents a 20-year, $650M + $16B = ~$17 billion procurement failure pattern across multiple technology implementations. This demonstrates:
The VHA story spans two decades and nearly $17 billion in failed procurement transformations, making it the ultimate case study for why “ProcureTech implementation insurance” is essential. The human cost (canceled surgeries, patient harm) elevates this beyond financial failure to a moral imperative.
30
BONUS COVERAGE
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