How London IT director saves millions by buying patient record system.

By Tony Collins

An NHS organisation in London has bought an electronic patient record system for less than a third of the cost of similar technology that is being supplied by BT to other trusts in the capital and the south of England.

The £7.1m purchase by Whittington Health – a trust that incorporates Whittington Hospital near Archway tube station – raises further questions about why the Department of Health is paying BT between £31m and £36m for each installation of the Cerner Millennium electronic patient record [EPR] system under the NPfIT.

Whittington Health is buying the Medway EPR system from System C which is owned by McKesson. The plan is for the EPR to operate across GP, hospital and social care boundaries.

It will include a patient portal. The idea is that patients will use the portal to log on to their Whittington Health accounts, see and save test results and letters, and manage outpatient appointments on-line.

In a board paper, Whittington Health’s IT Director Glenn Winteringham puts the case for spending £7.1m on a single integrated EPR.  Winteringham puts the average cost of  System C’s Medway at £8m. This cost, he says, represents “significant value for money” against the average deployment costs for the NHS Connecting for Health solution (Cerner Millennium) for London of £31m. In the south of England the average cost of Cerner Millennium is £36m, says Winteringham in his paper.

He also points out that the new EPR will avoid costs for using “Rio” community systems. The NPfIT contract with BT for Rio runs out mid 2015. “From this date onwards the Trust will incur an annual maintenance and support cost. Implementing the EPR will enable cost avoidance to the [organisation] of £4m per year to use RIO (indicative quotes from BT are £2m instance of RIO and the [organisation] has 2 – Islington and Haringey).

BT’s quote to Whittington for Rio is several times higher than the cost of Rio when supplied directly by its supplier CSE Healthcare Systems. A CSE competitor Maracis has said that, during a debrief, it was told that its prices were similar to those offered by CSE Healthcare for a Rio deployment – then less than £600,000 for installation and five years of support.

In comparison BT’s quote to Whittington for Rio, as supplied under the NPfIT, puts the cost of the system at more than fifteen times the cost of buying Rio directly.

In short Whittington and Winteringham will save taxpayers many millions by buying Medway rather than acquiring Cerner and Rio from BT.

Why such a price difference?

The difference between the £31m and £36m paid to BT for Cerner Millennium and the £8m on average paid to System C could be partly explained by the fact that Whittington (and University Hospitals Bristol) bought directly from the supplier, not through an NPfIT local service provider contract between the Department of Health and BT. Under the NPfIT contract BT is, in essence, an intermediary.

But why should an EPR system cost several times more under the NHS IT scheme than bought outside it?

Comment:

Did officials who agreed to payments to BT for Cerner and Rio mistakenly add some digits?

Whittington’s purchase of System C’s Medway again raises the question – which has gone unanswered despite the best efforts of dogged MP Richard Bacon – of why the Department of Health has intervened in the NHS to pay prices for Rio and Cerner that caricature profligacy.

Perhaps the DH should give BT £8m for each installation of Cerner Millennium and donate the remaining £21m to a charity of BT’s choice. The voluntary sector would gain hundreds of millions of pounds and the DH could at last be praised for spending its IT money wisely.

Whittington buys Medway and scraps Rio – E-Health Insider

NHS IT supplier “corrects” Health CIO’s statements

MP seeks inquiry into BT’s £546m NHS deal

NPfIT go-live at Bristol – trust issues apology

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4 responses to “How London IT director saves millions by buying patient record system.

  1. Tony

    Can you remind us, please, if a Trust adopts Lorenzo or Millennium, does the trust pay or is the cost borne by central DH funds? That is, when a Trust refuses to adopt one of these packages, is it correct to say that DH “can’t give it away for free”?

    Thank you, in advance.

    Best wishes
    dm

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    • David

      It’s partly true. Lorenzo and Millennium under the NPfIT local service provider contracts are centrally-funded, and so are “free” to trusts but most don’t want them anyway, in part because support/continuation/replacement costs fall to trusts when the NPfIT contracts end in 2015/16; and those costs could be high. Also, trusts have to pay some of the costs of their Lorenzo and Millennium implementation and training – and these subsidised costs can be high too. Tony

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  2. On the other hand…

    Why is it that an EPR costs £8million at all?

    The Maracis list price for a site licence with unlimited users and access to all its technologies available at the time is still well under one-tenth of that price. The reason is simple. Cost overheads – big corp big costs and profit margin; there can be no justifiable reason why the support of a standard system (from whomever) should not cost the same wherever it is deployed. Generally this support figure is arrived at as a % of licence purchase price (10% to 20%); there can always be some horse trading. Buying solutions from big organisations is what the NHS loves doing. It’s addicted to it. Its procurement process is skewed towards it. Any procurement process starts with a PQQ (Pre Qualification Questionnaire). 95% of a PQQ, which is scored, is based on system content, company experience existing sites etc. The remaining 5%, and this is the humdinger of a catch which feeds the big co addiction, is based on the company’s turnover. If it’s less then 5 or 10 times the project solution cost (and where do these cost estimates come from – you guessed it, the big corps) you’re out of the procurement. So even if you score the maximum on the 95% because you don’t overcharge the NHS and you reinvest all your monies in R&D to improve your product you are out.

    This is the main reason the government’s statement of wanting to do more with SMEs will never be anything more than a good intention, well certainly when it comes to the NHS procuring EPR’s. The system is rigged against small innovative companies.

    One of the arguments has always been that the financial stability of small companies represents a higher risk to the purchaser; possibly true and there are ways to mitigate against them but I ask you to think about iSoft and its £multi million global turnover and it still managed to go bust were it not bought out by IBA and then again when IBA could not make it work CSC steps in (not sure that should have been allowed but that’s another thread) and it looks like iSoft is doing a good job on CSC’s books as well. Do I need to go on? Does it need to be any clearer?

    The NAO and the PAC have made it very clear but CfH / DOH don’t act. They may listen of course. It takes people in the NHS to wake up and smell the roses, like Glenn Winteringham, as mentioned, to act in the best interests of their patients and Trusts. Now I might think that the price they are paying is still steep but where else can they go?

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