MP questions why IT costs at two nearby hospital trusts are vastly different for similar systems

By Tony Collins

A Conservative MP has asked the NHS Chief Executive Sir David Nicholson to explain why an NHS trust is deploying a centrally-chosen Cerner patient record system at more than twice the cost of a similar but non-NPfIT system at a nearby Foundation trust.

University Hospitals Bristol NHS Foundation Trust is deploying the Medway system from System C  (now owned by McKesson] at a reported cost of £8.2m over seven years. The acute trust is one of the largest in the country.

With support for less than five years, the nearby North Bristol NHS trust is taking the Cerner Millennium patient record system under the NPfIT at a cost of £21m from BT – and the go-live date in June has slipped to July.

Now Richard Bacon, a member of the Public Accounts Committee, has written to Sir David Nicholson asking for an explanation of why the two trusts are paying vastly different amounts for systems that do similar things. Bacon has also asked Nicholson whether he believes the higher sum is value for money.

The average cost of BT Cerner go-lives under  the NPfIT is £28.3m according to the National Audit Office.

Bacon’s letter is part of evidence which suggests that continuing NPfIT contracts is costing hundreds of millions of pounds more than necessary.

The coalition government, despite its plan to cut public sector IT costs, may spend a further £3bn to 4.bn with the NPfIT’s two major suppliers, BT and CSC, though the Cabinet Office’s Major Projects Authority is reviewing CSC’s £2.9bn worth of contracts.

Bacon’s letter also questions advance payments to CSC, and whether a recent hearing of the Public Accounts Committee was told the full truth.

An unwavering defender of the NPfIT, Nicholson is likely to defend the cost of the North Bristol implementation, and the advance payments to CSC. On costs, he will argue that North Bristol’s systems have better resilience than at non-NPfIT sites.

If that were true – and there is no evidence it is – the extra costs of having a “hot”, or real-time standby data centre, may not justify a doubling of a rival’s prices. 

This is Bacon’s letter to Sir David Nicholson:

Chief Executive, National Health Service, Department of Health, Richmond House, London SW1A 2NS

27 June 2011

Dear Sir David

NATIONAL PROGRAMME FOR IT IN THE NATIONAL HEALTH SERVICE

I am writing following the hearing of the Public Accounts Committee on Monday 23 May 2011, to follow up on two important issues that were raised during your evidence:

ADVANCE PAYMENTS TO SUPPLIERS

In your supplementary memorandum to the PAC following the hearing you gave a total of advance payments made up to 31 March 2011, in respect of all contracts over the whole period of the Programme, of £2,532m of which suppliers have retained £1,328m. You also identified a further £119 million of advance payments to be earned or refunded.  Since the memorandum was received by the PAC, it has been reported that the NHS made an advance payment of £200 million to CSC in April 2011.

I should be most grateful if you would let me know the answers to the following questions:

Is this report accurate?

Why was this payment was not reported to the PAC, either during the hearing or in the subsequent memorandum?

What was the justification for this payment and what value does it represent to the NHS?

What will happen in respect of this payment if a new memorandum of understanding is not in fact signed with CSC?

I would also be grateful if you would comment on the CSC filing with the US Security and Exchange Commission, which states that in the opinion of the company, if the NHS were to terminate the current contract “for convenience” it would owe fees totalling less than the $1 billion asset value CSC now has on its books for the contract.  

How is this consistent with the claim at the PAC  hearing by Ms Connelly that the cost of terminating the CSC deal could “potentially leave us exposed to a higher cost than if we completed as it stands today”?

2. THE COST OF DEPLOYING CERNER MILLENNIUM AT NORTH BRISTOL

Second, I would be grateful if you could comment on the cost of deploying Cerner Millennium at North Bristol, reported in your memorandum as £21 million, including service for 56 months, and on the current expected go-live date.  Specifically:

Can you explain why the delivery date agreed with BT at the contract “reset” was 4th June 2011?

Why it was then revised to 2nd July 2011?

And why it now appears that there is no agreed delivery date at all?

Can you also give your best comparison of the cost of deploying the Cerner Millennium system at North Bristol, with the cost to University Hospitals Bristol of deploying the System C Healthcare Medway system outside the National Programme?  It would appear from media reports that this latter contract includes deployment of functionality including PAS, Accident and Emergency, maternity, theatres, clinical data collection, and a data warehouse and reporting system, as well as integration of third party and current Trust applications.  According to the National Audit Office, the average cost for each new site under the BT South contract is £28.3 million, but the cost of the Medway system to UHB has been reported as £8.2 million over seven years. (http://www.guardian.co.uk/healthcare-network/2011/may/19/university-hospitals-bristol-foundation-trust-awards-e-patient-contract)   What is the justification for this apparent difference?

As the Senior Responsible Owner for the National Programme, can you give your explicit undertaking that the North Bristol contract represents value for money for taxpayers?

I look forward to receiving your reply.

With many thanks

Yours sincerely

Richard Bacon

MP for South Norfolk, Member of the Public Accounts Committee