Summary of today’s National Audit Office report on £11.4bn NHS IT scheme


By Tony Collins

 The Department of Health says today that change is needed to the NHS’s £11.4bn National Programme for IT.

Its statement comes as the National Audit Office publishes a critical report on the NPfIT and, in particular, the Programme’s main project: detailed care records systems.  A spokeswoman for the Department said: “This report from the NAO highlights major concerns with the pace and scale of delivery of information systems under the National Programme for IT.

“We agree change is needed and that the original vision was flawed. This is why last year we announced a move away from a centralised, national approach to IT to localised responsibility and decision making.

“However we do think the investment made so far in the NPfIT will potentially deliver value for money now that we have a more flexible approach that allows the local NHS to be in charge of its own requirements.”

Key points in the NAO’s report on the NPfIT

These are most of the main points in the NAO report “The National Programme for IT in the NHS: an update on the delivery of care records systems”. The sub-headings are mine. 

Main aims of the NPfIT won’t be achieved

“The rate at which electronic care records systems are being put in place across the NHS under the National Programme for IT is falling far below expectations and the core aim that every patient should have an electronic care record under the Programme will not now be achieved,” says the NAO report.

System deliveries to 3,197 NHS organisations are outstanding

“Of the 4,715 NHS organisations in England now expected to receive a new system under the Programme, 3,197 are still outstanding. The current CSC contract alone requires delivery of 3,023 GP systems and over 160 deliveries of Lorenzo by July 2016. Successful implementation of Lorenzo by this date would require a delivery rate of between two and three trusts a month over the next five and a half years.”

Cuts made in the number of systems and functionality – but not commensurate cut in costs

” The number of systems to be delivered through the Programme has been significantly reduced, without a commensurate reduction in the cost… Although far fewer systems are now being delivered in London, there has not been a significant reduction in the total contract value. Care records systems for 1,243 GP practices and the London Ambulance Service have been removed from the Programme. In addition, the number of systems being delivered in acute trusts has reduced by around half. Savings achieved as a result of this reduction in scope have, however, been just £73m out of £1.021bn because the original approach to delivering systems did not work and the Department has paid more for the systems to be tailored to meet the local needs of NHS trusts.”

NPfIT not value for money

“The £2.7 billion spent so far on care records systems does not represent value for money… Central to achieving the Programme’s aim of improving services and the quality of patient care, was the successful delivery of an electronic patient record for each NHS patient. Although some care records systems are in place, progress against plans has fallen far below expectations and the Department has not delivered care records systems across the NHS, or with anywhere near the completeness of functionality that will enable it to achieve the original aspirations of the Programme. The Department has also significantly reduced the scope of the Programme without a proportionate reduction in costs, and is in negotiations to reduce it further still. So we are seeing a steady reduction in value delivered not matched by a reduction in costs. On this basis we conclude that the £2.7 billion spent on care records systems so far does not represent value for money …”

The £4.3bn as yet unspent may not prove to be value for money

“Based on performance so far, the NAO has no grounds for confidence that the remaining planned spending of £4.3bn on care records systems will be any different [on value for money].”

£6.4bn spent so far on the NPfIT

About £6.4bn had been spent on the National Programme by 31 March 2011. About £5bn yet to be spent on the NPfIT overall, of which £4.3bn is due to be spent on delivery and implementation of care records systems up until 2015/16.

Need to re-evaluate the business case for the NPfIT

“Given its past history, the major issues still confronting the care records systems, and with such significant funds still at stake, there is a compelling case for the recently announced Whitehall-wide review to re-evaluate the business case for the Programme to determine what should happen now to safeguard against further loss of public value. That re-evaluation should include consideration of the significant risks outlined below.”

Future uncertainties and risks

– Funds to cover the NPfIT are guaranteed until 2012 – what then?

– Contract renegotiations with CSC will reduce number of deployments and functionality of systems that are deployed.

– CSC’s contract may be terminated.

– “Local costs may increase as a result of the need to make systems provided outside of the Programme compatible with systems provided through the Programme.”

– Much work is still needed before care records systems are able to do what the DH expected at the outset of the Programme.

– “By 2012, as part of the reorganisation of the NHS, strategic health authorities will be abolished and the existing governance structure for the delivery of care records systems will disappear. Although initial proposals have been discussed by the Programme Board, it is not yet known: who will manage the existing contracts up to July 2016; who will measure and report on the benefits of the Programme; and how the financial implications for the Programme of the structural changes to the NHS will be managed and by whom.”

– “By 2015-16, when contracts for the delivery and support of care records 35 systems expire, responsibility for the continued support of these systems will transfer from the Department to the NHS organisations using them. These organisations, however, currently have no direct contractual relationship with those providing the systems. There remains considerable uncertainty about the financial liability of NHS organisations using the Programme’s systems and the cost and mechanism for transferring services from the Programme to any new suppliers.”

– Ministers expect up to £20bn of NHS savings by the end of 2014/15.

– There is “uncertainty over the future of NHS Connecting for Health”.

– Uncertainty over the future of the “Spine”.  The NAO says: “Some contracts for national systems such as the Spine, which are in regular use across the NHS, come to an end as soon as June 2013. The Department has three options for continuing these services: use clauses within existing contracts to extend them – this would be a short-term arrangement whilst the Department considered other options; procure new national contracts through open competition; give responsibility for procuring services to individual local NHS organisations –  this might risk a return to the haphazard procurement practices that the Programme sought to address.”

Cost overruns – but overall NPfIT cost to be cut by £1.3bn

“At the time of our last report in 2008, the estimated total cost of the Programme was £12.7bn. Although the cost of the Programme has since increased by around £500m, the Department plans to offset this increase and reduce the overall cost of the Programme to £11.4 billion.”

Fujitsu received more money after its contract termination than before – £71m before and £80m after

“At the point of termination, the Department had paid Fujitsu £71m of its £1.104bn contract for delivery of the first release of Millennium at eight acute trusts. After termination, the amount charged by Fujitsu to maintain the live Millennium sites doubled because Fujitsu was no longer bound by its original contractual terms. Fujitsu was paid a total of £80m in the 12 months prior to BT taking over the live Millennium sites. The Department is seeking to recover the increase in costs as part of its ongoing dispute with Fujitsu.”

Summary Care Record expected to cost £150m

About £100m has been spent so far on the SCR. [This is the first time any official figure has been given on the cost of the SCR.]

Do DH and NHS Connecting for Health understand supplier invoices?

The NAO raises the question of whether the DH and CfH have been paying supplier invoices without fully understanding and analysing those invoices. The NAO’s auditors found that NPfIT suppliers provided more useful information to the NAO on their invoices than did Whitehall officials. The NAO says: “Our findings are presented in the context of a lack of clarity between the Department and its suppliers about basic management information. In some cases we have been unable to reconcile the discrepancies we have identified. For example, information we received from the suppliers on Friday 13 May does not reconcile with information provided by the Department the previous day. The Department was unable to provide clarification to reconcile the discrepancies by the time this report was submitted by the Comptroller and Auditor General for publication on Monday 16 May…”

Indeed the DH may not understand fully what it has paid out

“The Department has so far spent some £1.8bn on delivering care records systems, but was unable to provide us with a breakdown of what it has so far paid for each system… the Department is unable to calculate how much of the £854m paid to CSC has been spent on these [interim] systems…”

Lack of transparency

“There is a lack of transparency, regarding the impact these changes [in London] have had on the functionality now being provided compared to what was originally expected. The Department has also been unable to provide us with a full breakdown of the cost implications of these changes but Departmental papers suggest that they resulted in an increase in the average cost of [Cerner’s] Millennium per acute trust by at least 18 per cent… Since January 2011, the National Audit Office has made a series of requests for an explanation of what level of functionality has been delivered to update those data provided to the Cabinet Office for its 2010 review of the Programme. On 5 May 2011, the Department provided an assessment of functionality, but this was based on an alternative methodology than that used for the data provided to the Cabinet Office.”

CfH and DH still overly optimistic on progress – is this misreporting?

“The Department now reports that in London and the South 91 per cent of the functionality for the acute system has been proven to work. Similarly, the Department estimates that 64 per cent of the acute system to be provided in the North, Midlands and East has also been developed. We have not had time to validate the Department’s assessment, but our initial view is that it risks presenting an overly positive position on progress. For example, the Department’s assessment does not mean that 91 per cent or 64 per cent of functionality is available across acute trusts in London and the South, and the North, Midlands and East, respectively. That is because this assessment does not measure the extent to which functionality has been delivered and is in use. It measures technical readiness of individual modules and assesses development to be complete when it has been delivered in one care setting, for example, a ward or a unit, in one NHS organisation. The Department considers that delivery in one setting provides assurance that the functionality can be delivered to any NHS organisation, even though past experience of delivering systems through the Programme indicates that it may not be this straightforward. Furthermore, the Department’s assessment is not weighted according to the complexity or potential benefit of each module.”

What of the aim to have compatible systems across the NHS?

“With fewer systems being provided through the Programme and more use being made of a variety of existing systems, there is an increased risk of not achieving adequate compatibility across the NHS to effectively support joined up healthcare. The Department estimates that achieving interoperability will cost at least £220 million.”

Have officials ever measured progress against the original NPfIT aims?

“The Department’s assessment also does not measure progress against the original aims of the Programme, but rather a minimum specification level of functionality agreed with clinicians in 2008, reflecting the move towards a more flexible approach. The Department has recognised that the measure of functionality delivered should ideally relate to the detailed requirements set out in each of the original contracts, weighted according to the clinical benefit provided and complexity of implementation, but has not undertaken such an assessment.”

 The NPfIT vision has been compromised

“If progress is set against the original aims of the Programme, the overall level of functionality provided to date is well below what the Department contracted for. For example, clinical benefits, such as the ability to electronically manage the prescribing and administration of drugs in hospitals, are expected to be delivered in later releases of the systems which are not yet available. Some of these later releases, have yet to be developed which puts at risk the delivery of the Programme’s aims, even in London, where progress is more advanced… Since the contracts for care records systems were let in 2003-04, their implementation has been subject to delay and difficulty, and delivery targets have been repeatedly missed. Despite repeated warning signs, these problems have persisted over several years and the Department has now compromised the vision of the fully integrated care record system that was the objective of the Programme at its inception.”

Work unlikely to finish even in 2015/16 – 13 years after NPfIT launch.

“Based on overall performance to date, we consider that under the terms of the current contracts it is unlikely that the remaining work can be completed by the end of the contracts.”

Any NPfIT funding after 2012?

“…Although in January 2011 the Programme Board reported that a significant gap existed between the funds required for the Programme and those available, following the Spending Review settlement the Department now reports that it has been allocated sufficient funds to cover the expected costs of the Programme for 2011-12. The Programme Board identified, however, that clarity on the funding of systems in use by the NHS needs to be addressed urgently, to enable planning for 2012-13.”

In CSC’s area only 10 out of 97 acute systems delivered

“Care records systems have also been delivered to 56 of 90 community health services, There have, however, been particular delays in acute trusts where only 10 of 97 systems have been delivered, and in mental health trusts where none of the 35 systems have been delivered. Because of delays in developing one of its systems, CSC has also delivered 81 interim systems to trusts whose systems needed to be replaced urgently. These systems were not previously considered by the Department to meet the aims of the Programme and under the terms of the current contract will need to be replaced. The Department does not now expect all of the interim systems to be replaced, although this is subject to finalisation of the ongoing negotiations to reset the contract in the North, Midlands, and East… By 31 March 2011, the Department will have paid CSC £854m for delivery of care records systems.”

More than 3,000 defects were in Lorenzo – against a contractual limit of 700

“In November 2009, as a consequence of the limited success achieved in delivering Lorenzo in acute trusts, the Department identified five criteria against which progress would be measured. These covered whether the system existed, was robust and reliable, had been successfully delivered, could be delivered at scale by the supplier and was on track to be delivered at an acute trust by March 2010. Based on CSC’s delivery of interim systems, the Department judged that CSC had the capacity to deliver at the required scale. The Department concluded, however, that CSC could not deliver Lorenzo within the timescales required in the contract because it was not ready and had 3,128 identified defects against a contractual limit of 700. The current CSC contract requires Lorenzo to be delivered at over 160 further NHS organisations by July 2016.”

Disagreements with CSC

“There have been significant delays in the development and delivery of the Lorenzo system, the reasons for which are the subject of a dispute between the Department and CSC… Following a number of delays in development [of Lorenzo 1.9], [an] early adopter trust announced, in April 2011, that it no longer wished to remain in the Lorenzo early adopter programme and was considering other options available in the wider IT market. The reasons for the delays and the trust’s withdrawal from the early adopter programme are the subject of a dispute between the Department and CSC.”

Department’s value-for-money defence of NPfIT relies on the use of the future tense

“The Department considers, however, that the money spent to date has not been wasted and will potentially deliver value for money. This is based on the fact that more than half of the Trusts in England have received systems under the programme and no supplier is paid for a system until that system has been verified by the Trust to have been deployed successfully. The Department believes that the flexibility provided by the future delivery model for the programme will deliver functionality that best fits the needs of the clinical and managerial community. The future architecture of the programme allows many sources of information to be connected together as opposed to assuming that all relevant information will be stored in a single system. This approach has been proven in other sectors and is fully consistent with the Government’s recently published ICT strategy.”

Did CfH and DH delay giving NAO information until it was too late to evaluate?

The DH had a commitment set by the Public Accounts Committee in January 2009 to deliver a benefits statement for the NPfIT in 2010. It was not produced. Mark Davies, an author of the NAO report on the NPfIT, says the benefits statement was not provided to the NAO formally until 11 May 2011 by which time it was too late for the NAO to audit. The NAO had set 18 May 2011 as the date for publication of its NPfIT report. Said Davies: “They had produced various drafts of the document and the NAO had a document in draft but it had no status until the National Programme Board put it in a form, with summary and analysis to enable the NAO to do an audit. We will do a proper assessment of it and report back to the Committee.” The NAO’s assessment so far of the benefits statement is that it “seems to rely in some places on a small number of submissions from trusts and only a minority of the claimed benefits relate to care records systems”.

Can the £9m cost of RiO be justified?

The NAO said that BT bought software and services from the supplier of RiO in 2006 for £46m. BT supplied the system to 37 sites in London at a cost of about £9m per site.

£817m are central Programme costs to 31 March 2011 – which excludes payments to BT and CSC.

Total central NPfIT costs by 2015/2016 are expected to be £1.19bn.

Interoperability could costs NHS trusts £172m

“The Department estimates that the central cost of developing an approach to support NHS organisations in achieving this interoperability is likely to be some £52m. The cost to local NHS organisations of achieving interoperability is to be £172m.”

Today’s NAO report

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