Analysis of correspondence between health CIO and MP

The correspondence between Conservative MP Richard Bacon, a long-standing member of the Public Accounts Committee, and the Health CIO Christine Connelly is published separately on this blog.   

This is a summary of the points that arise from the correspondence:

1. Bacon asks Connelly for an undertaking that the proposed revised contracts with the NPfIT local service providers BT and CSC will be value for money. Connelly gives no such undertaking. 

2. On 9th September 2010, Connelly said that: “the best way to get value for money is to honour the contracts”. 

3. In his first letter Bacon asks “whether proposed spending reductions are being achieved by permitting BT and CSC to make disproportionate cuts in planned deployments and in the functionality of systems on offer”. 

4. Specific issues of dispute between Connelly and Bacon are: 

€¢ Are the new contract terms with BT value for money - for example in London - or do they offer only limited savings for large cuts in deployments and functionality?

€¢ Do the RiO payments to BT in the South - £9m for each of 25 sites - offer value for money when other non-BT RiO deployments have cost between £0.5m and £1m?

€¢ Is the assumed number of deployments of Lorenzo by CSC and iSoft realistic given that many Trusts seem to be highly sceptical about the system and have noted repeated missed deadlines and broken promises about Lorenzo?

5. Specific evidence given by Bacon includes: 

€¢ “In London, the new contract signed with BT in April cuts £112m from the original £1.1bn contract signed in 2003. Of the 32 acute trusts in London, around half will not now get Cerner Millennium as BT will offer at most 10 more Cerner deployments to add to the 8 already in place; fewer community trusts will get RiO; and the requirement for BT to deliver around 1,500 new GP systems across the capital has been dropped. New software for the London Ambulance Service has also been abandoned. This would seem to amount to delivering half the original contract for a small reduction in charges”

€¢ “According to a letter from the Comptroller and Auditor General …, dated 18th November, BT will be paid £36m for each of the seven NHS trusts running Cerner Millennium installed by the Southern region’s former local service provider, Fujitsu. It will get £23m for each of three new Cerner installations. And it will receive £9m for each of the 25 RiO community and mental health sites in the South. All prices are said to be based on pricing in the other LSP contracts. However, it has been reported that RiO has been implemented in other Trusts for between £0.5 and £1m.”

€¢ “DH is negotiating a Memorandum of Understanding with CSC that would see 187 NHS trusts assumed to take the Lorenzo system; only 35 fewer than specified in the original £3bn contract. But … there is good reason to think that many fewer Trusts will in practice agree to take the system … A number of Trusts have already indicated that they are not committed to Lorenzo and reserve the right to make other arrangements.”

6. In reply, Connelly states that:

€¢ “the number of Trusts scheduled to receive the Cerner product has been reduced. However this quantitative change needs to be considered in the context of the qualitative, i.e. functional, improvements and enhancements that have also been agreed. Previously the Cerner Millennium solution was more limited” … “I am afraid you are misinformed about the level of Cerner functionality. Functionality has not been reduced. Indeed, the exact opposite is the case”. 

€¢ “It is difficult to comment meaningfully on the financial comparisons you make about the RiO product, since it is not clear what scope, duration or terms apply to Trusts that you say have taken delivery of RiO for between £0.5m and £1m and how if at all these compare with the product for which we have contracted” 

€¢ “ … I regard the history of delivery of Lorenzo to date as very unsatisfactory. Because of this we have been looking to achieve a more flexible approach to delivery of the system on the basis that the latest plan from CSC for the delivery of the product … is achieved as well as securing the reduction in contract cost. The Chief Executive of the NHS and the President of CSC are planning to meet to discuss this matter further …” 

7. In reply to these points, Bacon’s second letter says:

€¢ “My point about the Cerner product in London was that originally planned deployments of GP systems, a London Ambulance solution and a number of systems in acute trusts were included in the original contract price of £1.2bn and are not now being delivered.  I note that you do not comment on my observation that only about half the original contract will be delivered, but that payments have been reduced by only £112m.  I cannot see how this can be value for money to the taxpayer and I note that you do not claim that it is”… 

“I refer you to page 23 of the June 2006 NAO report in which it is stated that Cerner Millennium was being supplied in four releases, covering the same functionality as the original five IDX releases. This included a Patient Administration System, a GP system, a web-based referrer, a pharmacy system, and systems for acute departments, emergency care and mental health, all to be delivered as an integrated Cerner solution. Much of this has now been dropped, and replaced with cheaper departmental systems such as RiO, but I cannot see that the taxpayer has seen an appropriate consequent saving.” 


On Cerner, there might have been some recent improvement in what was promised for Cerner Millennium but this may still be less than what was promised or anticipated when NPfIT began, or even at the time of the 2006 report of the National Audit Office.

On RiO, the systems supplied directly by CSE Servelec seem to be functioning in practice as well as the LSP version, so it is difficult to see why the NPfIT version costs about 10 times as much. Richard Bacon has been happy to give Connelly a list of non-NPfIT RIO users, if that would help in analysing the comparison.

On Lorenzo, Bacon rightly questions whether the Department of Health should persist in supporting the deployment of the Lorenzo system through the NPfIT contract with CSC. 

On these grounds Bacon has a strong case for saying that new deals should not be agreed with CSC or BT until investigations by the NAO and the Public Accounts Committee are complete.  




Copyright © 2011 IDG Communications, Inc.

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