Bad software bursts £1bn NHS bubble

A KEY ELEMENT of the UK's gargantuan health IT scheme was exposed as a fallacy yesterday when Fujitsu, one of four original suppliers of patient systems, dumped its £1bn contract, becoming the second supplier to have jumped ship. The IT industry has taken Fujitsu's resignation as evidence that both its £1bn contract with Connecting for Health (CfH), the UK health IT quango, and the original aims of the National Programme, had become untenable.

Fujitsu's contract had another six years to run and, according to sources close to the firm, had only been paid half of the £300m to £400m it had spent doing the work. When Fujitsu signed the 10-year deal in 2004 (then for £896m) it was under the assumption that the £12.7bn National Programme for IT, the grand NHS IT scheme, would force all 86 local health trusts in its patch to use the software it provided, guaranteeing income and justifying the infamously stringent contractual terms it signed up to.

Crucial changes in the Programme have since left Fujitsu in a position were it can can no longer guarantee its income under the original deal. It is said to have bailed out after failing to secure, after 10-months of negotiations to reset the contract with CfH, a position that would recover its costs, with an asking price of £1.2bn. CfH was expecting Fujitsu to accommodate moving goal posts without charging any more money, but the moving goal posts made it a more costly exercise for the supplier.

What has changed is the perception that the Programme could force legally autonomous trusts to take its software; and the idea that a centrally-designed system could be suitable for all trusts alike. The façade of the centrally-dictated national scheme crumbled over the last year, revealing an NHS which looked little different to before the Programme started, said NHS IT advisor Murray Bywater of Silicon Bridge.

NHS IT has reverted to a market-led structure in which CfH is only one competing supplier with software that the National Audit Office said this month was still four years from being completed. "The original contracts were awarded on the mistaken premise that the National Programme would be able to force everyone down the route they envisaged. That was part of their pricing algorithm," said Phil Sissons, former supplier liaison manager for the Programme.

This was wishful thinking: "There was never any ability for Connecting for Health to actually demand that a trust would go down a specific route," he said. The original contracts demanded a one-size-fits-all Patient Administration System (PAS) of Fujitsu and the other three Local Service Providers. But chief executives of local health trusts were used to paying for software that catered to their specific needs. CfH has since tried to accommodate these needs in changing specifications, but the LSPs were already struggling to deliver the PAS software and the changing needs lumped them with more costs. The Programme is already billions of pounds over budget.

The writing appeared on the wall for the national scheme last April when CfH devolved responsibility for the programme on Strategic Health Authorities, by which it recognised that it had no right to foist its systems on their health trusts. That left Fujitsu and other contractors in the position of having to go out and convince the trusts to use the software they were selling under the auspices of the Programme. This would have added a 10 per cent cost of sale to their balance sheet, said Bywater, and that in addition to ballooning development costs.

This situation was clarified further last week when CfH finalised the contracts under its Additional Systems Capacity and Capability (ASCC) contract framework, which lets the LSPs off the hook by helping trusts do what they had always done, which is choose their own software.

This is just as well, because the software is crap, said one advisor to the LSPs. "This whole thing is because of the software isn't good enough," he said, "The trusts won't take the software, even though its free." Yet according to Fujitsu's contract, CfH must pay good health service money for every trust that doesn't want the software.

To rub salt in the wounds, part of the failed negotiation over Fujitsu's contract reset hinged on a recall of the plan to foist its unfinished PAS software - supplied by Cerner - on Community and Mental Health Trusts. It would now only be expected to supply the 41 Acute trusts in its region with Cerner PAS software - half of the number of trusts it was originally contracted to supply.

Only nine have bothered to date. Cerner's software was bred in the US market, and was described by one UK specialist today as a billing system that was being turned into a PAS. The development of Lorenzo, the PAS software being offered under the Programme throughout much of the rest of England, was also years behind schedule, yet being foisted on trusts in a limited early form.

And to think that CfH had at one point tried to get chief executives to sign a letter of indemnity, excusing the programme in the event that it turned into one almighty cock-up that wasted health service money, clinician's time and, heaven forbid, represented a cost - even an opportunity cost - to the NHS' task of saving people's lives.

Roger Wallhouse, who chairs a number of health IT firms including one that was already offering a fully-fledged PAS to the UK market before the Programme kicked them all out, said Cerner was trying to charge an "outrageous" amount of money for its unfinished software. "The NHS could buy those systems from UK suppliers for 30 per cent of the £900m that Cerner wants," he said. "You could get them faster than Cerner could deliver and that's always been the case," he said.

The PAS story has been a farce from the start. Fujitsu's last PAS supplier, IDX, was given the boot and it was forced by CfH to take on Cerner instead, and to consider no alternatives. Now CfH has itself been forced to accept that trusts are considering their own alternatives, in the guise of its ASCC framework, consultants are asking whether too many of the local PAS specialists who could have done the job years ago have withered on the vine.

Even if there were alternatives, CfH failed to say under what circumstances it will subsidise trust purchases under ASCC with central money. No-one in industry appears to know the answer to that one yet. And CfH failed to answer our questions on the matter today.

It may need to wait till the contracts are all reset, and Fujitsu is replaced, before it knows how much money it has to spare. Eddie Peers, director of Mentis Management Consultants, a tech advisor to hospitals, said CfH is now considering dealing direct with Cerner and doing Fujitsu's work itself. All the hard work has been done, and all the quango need do now to finish Fujitsu's job is wait for Cerner to finish developing the software and then help hospitals implement it.

It might take on some of the 1,900 people Fujitsu had employed on the job. Or it might resell the contract to BT or CSC, the last of the original suppliers still standing. CSC took on another of the five original contracts when Accenture quit the programme in 2006 and is still trying to agree its own reset with CfH, after 10 months of negotiations.

BT is thought to have agreed its reset already, but then it was also always said to have had more favourable terms than the other LSPs. It also had a more manageable job, supplying only the London area. Perhaps someone was looking over patients in London.

The same cannot be said for patients around the country, said Glyn Hayes, former chair of the British Computer Society's Health Informatics Committee and a long-time supporter of the Programme in principle. A lot of people are angry on behalf of patients, for some of whom the opportunity cost would have been great. µ