By Tony Collins
Four-year deal to deliver Lorenzo and other healthcare products
CSC announced today that it entered into an agreement with the NHS on August 31, 2012 to amend the existing contract under which CSC has developed and is deploying an integrated electronic patient records system using CSC’s Lorenzo Regional Care software products.
CSC says the agreement has received the approval of all required UK Government officials and is effective immediately. It offers “substantial flexibility to NHS trusts in their choice of electronic care records solutions while affording CSC the opportunity to expand and accelerate its marketing of the Lorenzo solution to NHS trusts across England”.
The term of the agreement extends through July 2016. It includes full mutual releases of all claims between the parties through the date of the agreement.
Under the deal the NHS will not be subject to minimum volume commitments which were part of the original NPfIT local service provider contracts. These controversial clauses had committed the Department of Health to a minimum spend with CSC, and could have led to the DH paying for deployments of Lorenzo that did not actually happen.
In return for this concession CSC has agreed to non-exclusive deployment rights in its designated regions. Trusts will receive ongoing managed services from CSC for a period of five years from the date of Lorenzo deployment by a trust, provided deployment is complete or substantially complete by July 2016.
“This agreement is a significant milestone in our relationship with the National Health Service and represents a renewed commitment by the NHS and CSC to a long-term partnership as well as CSC’s healthcare solutions,” said Mike Lawrie, CSC’s president and chief executive officer.
“Under this agreement CSC will continue to have the opportunity to support the NHS Information and Communications Technology infrastructure through deployment of our groundbreaking Lorenzo base product solutions, now rigorously tested and approved for wide-scale deployment across NHS.
“We are already seeing strong demand from NHS trusts that are confident our solutions will bring the safety and efficiency gains required by a modern NHS.”
Under the agreement the parties have redefined the scope of the Lorenzo products and have established deployment and ongoing service pricing.
CSC will deliver additional Lorenzo implementations “based on demand from individual NHS trusts”. The supplier says that a flexible arrangement has been established for these trusts to combine additional clinical modules with the core care management functionality of the Lorenzo solution to meet their specific requirements.
CSC and the NHS have also agreed to a streamlined approach for trusts which wish to take the Lorenzo products within the NHS-designated North, Midlands and East regions of England to obtain central funding from the DH for implementation of the Lorenzo products.
CSC may offer the Lorenzo solutions throughout the rest of England where trusts select CSC’s solutions through a separate competitive process.
It will offer a range of other solutions and services to the NHS, including general practitioner, ambulance and community systems, digital imaging and other related services.
CSC has told the US regulator the SEC that the new agreement “forms the basis on which the parties will subsequently finalize a full restatement of the contract”.
CSC gets £68m settlement up to 31 August 2012
The DH will pay CSC £68m, which represents what CSC says is “payment for value delivered to date, a net settlement amount for mutual claims of the parties and removal of exclusivity to provide a flexible market driven approach”.
But what the costs will be of continuing the NPfIT contracts, albeit modified, are not stated.
On the face of it the deal seems a reasonable one, though no figures are given. The big concession from CSC is the release of the NPfIT minimum volume commitments. It means the DH is not tied to minimum payments to CSC, whatever is deployed.
One question remaining though is whether trusts that have indicated they will take Lorenzo will be contractually committed to taking it. There’s a big difference between an intention to deploy and signing a contract to deploy it. Has the government made a promise to CSC to deploy Lorenzo at those trusts that have indicated a willingness to deploy it?
The DH says the new deal with CSC will save £1bn. CSC’s NPfIT contracts were worth £2.9bn. Much of that was unspent by August 2012. Does this new deal mean that CSC’s NPfIT contracts could still be worth about £1.9bn over 10 years, to 2015/16?
Open government requires that the DH release the terms of the deal, especially given the NPfIT’s disastrous history. But will that happen? Is the NPfIT being “dismantled” as the DH said it would be – or does this new deal with CSC keep it alive?
The DH says that savings of over £1bn will be reinvested into the NHS following its “legally binding agreement with CSC”.
The DH press release says that the agreement will give local hospitals and NHS organisations the power to make their own decisions about which IT systems they use.
“The money saved will go back into the NHS and would be enough to pay for half a million extra knee and hip operations, and almost 15,000 extra doctors”.
The DH says it is committed to dismantling the National Programme for IT.
“The Department of Health, the local NHS and Cabinet Office have been in negotiations with CSC to ensure the existing Electronic Patient Record system, known as Lorenzo, is fit for purpose and focuses on the NHS’s current needs as well as providing value for money.
“Under the new agreement, CSC’s exclusive rights to be the only provider of clinical IT systems in the North, Midlands and East of England have been removed.
“The Government has been renegotiating its major contracts to not only ensure wasteful spending is eradicated but that major suppliers are offering the best value for money.”
Health Minister, Simon Burns said “We’ve removed the restrictive, top-down, centralised approach and given the local NHS the power to make their own decisions about which IT systems they use.
“The modern NHS still needs healthcare IT systems to exchange information securely and meet the needs of their patients. By re-shaping this contract, delays will be avoided in delivering much needed IT systems to the NHS, and will ensure the investment made to date is not wasted.
“This agreement marks a step in the right direction and a move to a new way of working which will allow the NHS to secure value for money and tailor its IT systems to meet the needs of its local patients.”
Minister for the Cabinet Office Francis Maude said
“Since May 2010 we have been building a strong operations centre at the heart of Whitehall to ensure that Government runs more like the best businesses. As part of this we have been negotiating with our major suppliers, acting as a true ‘single client’, and generating savings of £806m and £437m respectively in the first two years of this Parliament alone.
“As I emphasised when I met with 20 of our top suppliers just last month, ours is not a Government that will tolerate poor performance – and today’s announcement will leave suppliers in no doubt that we will act to strip out waste from contracts where they offer poor value for the taxpayer.”
The Dh says that local NHS organisations “will no longer be committed to using Lorenzo, and will have the freedom to decide what IT systems are most suitable for their needs”.
CSC will retain responsibility for rolling out Lorenzo which is being used by 10 NHS organisations in the North, Midlands and East of England.
The DH says that if eligible local NHS organisations wish to use Lorenzo they will be able to access centralised support and funding but will first need to develop a robust business case and demonstrate value for money in order to gain approval to do so.