Published: 26/09/2002, Volume II2, No. 5824 Page 16 18

A national finance and ecommerce service could finally provide real-time information about NHS ledgers. Michael Cross reports

Not unlike baggy trousers, shared computer services are back in fashion. If everything goes according to plan, in two years' time trusts and other organisations will start shutting down their own financial IT systems and plugging into a national finance and e-commerce service.

The aim is to slash the cost of financial processing while for the first time providing real-time information about the state of NHS ledgers.

The finance and e-commerce project is the second major national IT scheme to emerge from the NHS Shared Services Initiative, the Leeds-based outfit set up to reverse the trend of trusts running their own office systems (it is due to become a special health authority from next April).

SSI chief executive Philip Hewitson stresses that this does not mean returning to the era of regional computer centres. 'In those days, progress moved at the pace of the slowest, ' he says.

In contrast, he says, SSI will 'create an environment where we get the benefits of centralisation'while leaving business units in control of their decision making 'in a way that is very responsive to their needs'.

The first test of whether a centrally run IT service can be 'very responsive'will be the national payroll and human resources system, known as electronic staff records. It is currently under testing by contractor McKesson as part of a deal worth£325m over 10 years. Pilot sites will get the system from May.

ESR is a colossal undertaking: one of the acceptance tests is that it must be able to handle 20,400 concurrent users. The pilot phase alone will require it to handle the records of 100,000 people.

Because of its size and complexity, ESR will be far from complete when the national finance and e-commerce initiative begins in earnest. Its timetable is for a contract signature in early 2004, with piloting to begin the same year.

Though details are still vague, the plan is to buy a single finance and procurement system for use by all the NHS's 700 autonomous bodies. It will replace 28 different finance systems in use today.

The current plethora of systems is a serious cause of waste, according to the project briefing document, since they 'militate against the NHS acting as one body in securing the economies of scale that should result from being one of the largest organisations in the world.'

Christine Daws, deputy director of finance and investment at the Department of Health, says the NHS spends more than£400m a year on finance and 'measured against an industry benchmark, that is hugely high'.

E-procurement aims to tackle an even bigger source of waste.Only one-third of NHS organisations have purchasing systems integrated with their finance systems.More than 50 different systems are in use in the NHS.

Eric Jackson, director of e-commerce at the NHS Purchasing and Supply Agency, says: 'In one region, I found they were using 35 different types of pencil from 34 different suppliers.'

As a result, PASA, which is supposed to rationalise purchasing and find economies of scale, doesn't know what's going on. 'The NHS has about 25,000 suppliers, but we really do not know [exactly] how many, ' says Mr Jackson.

It also lacks strategic information.At the time of the 2000 fuel protests, Mr Jackson couldn't find out how much oil the NHS had in its tanks nationally.

The solution is a single e-procurement system that will allow staff to order approved goods from electronic catalogues. Bradford Hospitals trust has already installed such a system (see box).

E-procurement is widely used by private business.

In the late 1990s, the IT industry expected the notoriously bureaucratic public sector to follow suit. Progress has been much slower than expected.

A government target for 90 per cent of all purchases to be made electronically by April 2001 was dropped.

One project that has gone ahead, and which may provide a model for the NHS, is Marketplace. This aims to cut the£25bn that local authorities spend on goods and services each year.Marketplace is accessed via an internet site run by a private supplier, e-Government Solutions. Councils pay a subscription of between£25,000 and£45,000 for the service, depending on their size.

The Improvement and Development Agency, which is behind Marketplace, says that collective purchasing could cut the cost of goods and services by an average of 8 per cent and cut the time spent on administering purchases by up to 80 per cent.As the system only went live in March this year, there is no hard evidence yet that it is having this effect.

The national finance and e-commerce initiative faces other uncertainties. These include:


The whole idea of national applications is based on the hope that internet technologies have solved the problems of creating very large systems. But the internet is no magic wand. The ESR system, with its 20,400 concurrent users, depends on new, untested IBM hardware.

Whether the benefits will be realised Estimates of savings from e-procurement have a back-of-the envelope feel to them. KPMG Consulting estimates any trust that implements its Wander system could save£1m a year, but admits this is hard to pin down. One benefit expected from the ESR system is to cut clerking time spent reentering personnel details of 200,000 people who move from one NHS employer to another each year. But whether trusts turn this into real cash savings by cutting clerical staff remains to be seen.

Implementation delays

All shared services contracts are subject to gateway reviews by the Treasury's office of government commerce: ESR's next gateway will be before the pilot phase begins.OGC will have to be wholly satisfied that it is not sponsoring another public sector IT fiasco before giving the go-ahead.

Up to now, IT suppliers have been enthusiastic - more than 70 firms sent executives to a suppliers' briefing on the finance and e-commerce initiative in July. But it may be difficult to persuade boards to assume the entire risk of managing the NHS's finances.Apart from the usual big IT project risks, there is a real wild card in the pack.What happens if a new government returns trusts to independence?

Mr Hewitson says this shouldn't matter. Foundation trusts, for instance, 'are still part of the NHS and still contribute to the NHS database... even if there was change, there would still be merit in having that data'.

The obverse risk is that a really spectacular failure by one of the national shared services projects might be used as evidence that the NHS is too big to manage, and provoke its break-up.

Truly, the stakes are high. l Bradford's Wander lust Bradford Hospitals trust has been buying supplies electronically since February this year.The trust's e-procurement system, Wander, allows busy hospital staff to raise requisitions, track orders, check deliveries and manage stock from pocket PCs, which can be used throughout the hospital.

Chief nurse Rose Stephens says: 'All staff select orders from a standardised catalogue.This means that whichever department you are working in, the range of products that are available to you will be the same.

'Product purchasing compliance will not only lead to tens of thousands of pounds of savings for the trust, it will lead to a reduction in clinical risk.'

Wander was developed by KPMG Consulting with Microsoft and Hewlett Packard, which is now promoting the system to the rest of the NHS.

The prototype was tested in operating theatres.The trust now has about 40 devices in use, usually shared by different staff within departments. It can even be used off-site: staff can connect to the main system via a PC or a wireless local area network developed by Cisco.

Measuring benefits of e-procurement can be difficult, says Gary Howe, a director in KPMG's healthcare practice.'We tried to measure the process improvements, but the question of how to quantify them is very difficult.Staff say quite categorically that It is saving them time.We haven't tried to quantify the time.

'The financial improvements are more about improvements in the supply chain that the product will sustain. It supports and sustains the improvements rather than delivering them itself.'

The vast majority of purchases are high-volume, low-cost items and here the system makes little difference.'Ninety per cent of your pain is caused by 20 per cent of items, ' says Mr Howe.

KPMG Consulting owns the intellectual property in Wander, with the trust's contribution to development 'reflected in the commercial arrangement.'Other trusts are already showing interest in the system.

www. doh. gov. uk/sharedservices