U.S. Firm Loses Part of Massive U.K. IT Project

IDX replaced by Cerner, will take $2M-$4M charge

A Burlington, Vt.-based software vendor working on an $11.2 billion IT overhaul of the U.K. National Health Service (NHS) has been removed from a major part of the project.

IDX Systems Inc., a maker of medical applications, earlier this month said that it agreed to end a contract with Fujitsu Services Ltd., the prime contractor for the project in the NHS's southern cluster region, which includes a handful of U.K. counties and islands.

The pact had called for Fujitsu to use an application jointly built by IDX and BT Group PLC for the NHS's London cluster. BT Group is the prime contractor for the London cluster.

IDX said it expects that the costs of exiting the contract will force it to take a charge of between $2 million and $4 million in the second quarter of 2005.

Fujitsu acknowledged that it had ended the contract with IDX but declined to comment on the reasons for the move. London-based telecommunications firm BT Group said it is not involved in the southern cluster project.

Better Patient Care

The goal of the 10-year project, dubbed the National Program for IT (NPFIT), is to update the health agency's operations so it can deliver better patient care and service.

The NHS unit overseeing the IT overhaul, Connecting for Health, allowed Fujitsu to replace IDX's enterprise clinical software, Carecast, with a health care application called Millennium from Kansas City, Mo.-based Cerner Corp.

Meanwhile, BT Group and IDX will continue to collaborate on developing software for the NHS's London cluster.

The move by Fujitsu to change vendors follows a warning in March by Richard Granger, director general of the NPFIT, that contractors that fail to meet deadlines can be dropped from the project.

"It was always envisaged that there might be some change of suppliers," said an NHS spokesman via e-mail. "Senior [officials] in Connecting for Health have publicly stated this on several occasions."

Assessing the Impact

The government spokesman said the removal of IDX from the southern cluster effort isn't expected to affect the overall project. According to the NHS Web site, the move "provides the opportunity for BT and IDX to redouble their focus on the delivery of services to the NHS in London."

The NHS spokesman referred specific questions on the subject of IDX's removal to Tokyo-based Fujitsu.

IDX declined to comment about the situation, referring instead to comments made by CEO James Crook Jr. in a June 1 statement announcing the changes.

"Fujitsu Services' decision to withdraw [IDX] from the 'common solution' and to align itself with another provider for the southern cluster is disappointing," said Crook. "We believe that, together with our prime contractor, BT, we have overcome numerous obstacles in delivering on the national program."

In the statement, Crook predicted that the IDX Carecast system will be deployed to the London region later this year.

Tola Sargeant, an analyst at London-based research firm Ovum Ltd., said Fujitsu's move to remove IDX from the regional project comes after "some well-documented delays" in the rollout of the Carecast software.

"BT has clearly had significant problems fitting IDX's software to the U.K. system, and we find it hard to believe that Fujitsu and Cerner won't face many of the same challenges," Sargeant said in a note regarding the project.

Copyright © 2005 IDG Communications, Inc.

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