Published: 16/01/2003, Volume II3, No. 5838 Page 5 6 7 8

Michael Cross examines the progress of the procurement strategy for the national IT programme and its implications for the health service and its suppliers

The NHS has fired the starting gun on the biggest IT race in its history. The competition, conducted through an open tender, is to select up to five companies as prime service providers of IT for the NHS in the foreseeable future. The winners stand to gain a sizeable chunk of the£2.5bn extra funding the NHS will receive over the next three years for its national IT programme, as well as spending on 'legacy' services. The losers will be out of the business for at least a decade, probably forever.

The starting gun was the publication of the procurement advertisement in the Official Journal of the European Communities just before Christmas.

The idea is that strategic health authorities will take responsibility for the purchase and management of IT systems from a limited number of PSPs, who will deliver products that meet agreed national standards. The days of trusts, radiology departments or individual GPs choosing their own IT systems are over. Under the broad principles, however, there is a mass of detail to be resolved if the new IT infrastructure is to be in place according to the timetable set out in last year's strategy announcement.

Among the issues that need urgent clarification are:

Accreditation.How will specialist application companies, who will work as sub-contractors to PSPs, be chosen?

Novation.When and how will trusts transfer their IT arrangements to the new national contracts?

Current procurements. Should trusts freeze all IT purchases until the new arrangements are in place?

Personnel.What will happen to NHS IT staff?

Chains of command.How will the strategy be enforced?

Some hints about these issues emerged at a briefing that Richard Granger, the new IT director general, gave last month to IT suppliers.

The meeting, Mr Granger's first public appearance since taking up his post on 1 October 2002, was less than emollient in tone. 'Competent, aggressive, businesslike, in control, 'was the view of one attendee. 'Diplomacy would not, perhaps, be high on a list of his attributes, ' said another.

The government unveiled its new IT programme in June last year. This set ambitious targets for connecting staff to a new broadband network and implementing national records, e-booking and e-prescribing services.

The strategy was followed up in the summer with a new vision for electronic records - integrated records services - and the new procurement strategy.

According to the original timetable, the procurement advertisement should have appeared in OJEC in October 2002, with a shortlist of PSPs in place by April 2003. At the suppliers'meeting, Mr Granger insisted that, despite the obvious slippage that has taken place, the strategy would be delivered on time.

Up to five PSPs will be identified by June and the national programme will be rolled out over the next two to three years. PSPs will form consortia with hardware and software firms. To ensure continuing competition, each consortium will have to contain at least two software suppliers.

Successful PSPs will be paid by results: their performance will be assessed annually over the life of a contract. If they fail to deliver, their contracts will be transferred to better-run firms.

Mr Granger made it clear that he did not have a high opinion of much of the healthcare IT industry today. According to the official version of his speech, he said: 'It is... apparent that there needs to be a greater emphasis on suppliers fully demonstrating their ability to play a major part in delivering the largest civil IT programme currently underway.'

According to people who attended the meeting, Mr Granger's actual words were more forthright.

In his view, there are two basic problems. The larger firms, potential PSPs, are lagging behind in technology and innovation.Mr Granger warned that he will invite PSP bids from outside the IT services world: civil engineering companies, for example, will be welcome.

Meanwhile smaller firms, the potential subcontractors to the PSPs, lack capital. As things stand, Mr Granger said, they are weak and ill prepared for the job of delivering the national programme.

The computer industry, naturally, disagrees. 'Our members feel the capacity is there and we can deliver, ' says Laurence Harrison, healthcare programme manager at the IT trade association, Intellect.

Mr Granger was also scathing about the functionality of many healthcare IT systems, especially when it comes to them exchanging data with each other. Primary care, with its legacy of GP practice management systems, is the biggest worry.

These 'ridiculous' systems do not meet the needs of today's NHS, said Mr Granger.

Primary care trusts will have centralised systems rather than networks of servers in individual practices. And suppliers that resist making their systems interoperable will be out of the market.

As expected, a major component of the procurement strategy will be accreditation: 'To verify the functional performance, scalability and interoperability of suppliers' software offerings.'

An accreditation organisation should be up and running in the first half of this year to test products before they are deployed to the NHS.

When the new-look industry, with its newly accredited products, has obtained national PSP contracts, with fixed prices, terms and conditions, the focus will shift to strategic health authorities.

They will place 'call-off ' contracts to PSPs, who will act as one-stop shops for all IT systems and services. The idea is that clusters of SHAs will emerge and place contracts for a geographical area.

The IT industry, which regards individual SHAs as too small and fragmented to make good customers, backs the idea but is worried about the pace of consolidation. In a position paper published last month, Intellect urged the Department of Health to create formal groups of authorities, perhaps based on the new English regional assemblies, rather than wait for them to happen naturally.

Whatever these new entities look like, chief information officers will have to ensure that the new systems are actually installed at trusts and other bodies.Most SHAs have appointed CIOs.

However, despite their obvious importance, not all have been given board-level positions.Mr Granger is looking for ways of giving CIOs clout - and also keeping them up to the mark.

At last month's meeting, he suggested CIOs would be his main local weapon. Though nominally employed by their SHA, they would be answerable to him, he said, as the person responsible for their 'career trajectory'.

There seems to be little room in this picture for IT managers in trusts.While Mr Granger said the role of trusts was 'being tackled', he also said involving individual trusts in decision making would cause too many delays.

However, the government does not want all current trust-level procurements to stop. It may be too late.All the signs are that activity ground to a halt last March, when DoH head of research Sir John Pattison first indicated there would be a new approach to electronic records and IT procurement.

Intellect's paper says there has been 'a nine-month hiatus' and that this has undermined delivery of the 1998 IT strategy Information for Health targets. It has also 'damaged the viability of specialist suppliers'.

The continuation of this hiatus, Intellect warns, 'will result in further reductions in supplier capacity and lead to serious damage to patient services, undermining the foundations on which the PSP model needs to build'.

Mr Granger's concession to these worries was to say that 'larger, more mature' IT procurements could go ahead, but those at an early stage should be stopped.However, he would not identify specific projects falling into either category.He did promise to publish rules for short-term procurements. These will include procedures for upgrading systems to the new accredited products and strong novation clauses so contracts can be transferred to PSPs without penalties.

Despite Mr Granger's blunt words about the NHS IT industry, many of the suppliers present at his first outing welcomed the certainty he brings to the national IT programme.Mr Harrison sums it up:

'He made it clear who is in charge and provided absolute project clarity on where We are going.'

However, it is not yet clear whether the new procurement strategy will tackle all of Intellect's concerns about the PSP model. It warns that the model is new to the NHS and is therefore a high-risk strategy. It also warns that the arrangements will take longer to develop than is currently being assumed.

Suppliers at the meeting felt that anything from six months to three years would be needed.Most felt 18 months would be an optimistic target for a fully operational PSP scheme - and two to three years a realistic one.

It remains to be seen how Mr Granger's style will go down with other NHS stakeholders, such as consultants and nurses.All will have to be brought on board if the NHS IT revolution is to succeed.

As Intellect's position paper warns: 'Little will be realised unless significant organisational development skills and resources are targeted at process analysis and change, education, culture change and change management throughout all levels of the NHS.Much of this organisational development will need to be conducted ahead of IT system implementation.'

'Ideally, you'd close down the NHS for a week and train everyone on the new processes, ' says one contender for a PSP contract.He knows that will not happen and predicts the consequences will be messy.

So far, Mr Granger seems untroubled by such doubts.His approach has been to focus on rolling out the technology and let others worry about reorganisation. 'There is only one outcome from this programme, ' he told last month's meeting, 'and that is the successful implementation of 21st century IT for the NHS in partnership with suppliers who perform.' l On the table: the likely bidders Some of the biggest names in computing have been mentioned as probable and possible bidders for prime service provider contracts.

Bidders may include EDS, Schlumberger Sema, IBM, Lockheed Martin, Fujitsu and CSC.Others could include McKesson, Logica, BT, Siemens and KPMG.

IT director general Richard Granger's disparaging remarks about the NHS IT industry, and his hints that outsiders could be invited to bid, bring other names into the frame.These include construction giants such as Amey, McAlpine and Bechtel, service providers such as Securicor and government favourites like Tesco and Virgin.