Two software companies at the centre of the NHS's £2.3bn IT
programme are going ahead with a merger despite ongoing legal
action and concerns among hospital trusts that it could drive up
their costs and reduce competition.
The aim of the merger of Isoft and Torex is to provide the "full
spectrum of the healthcare market, from the GP's surgery through to
the clinicians in hospitals and ancillary services."
But IBA, an Australian company and supplier of systems to the NHS,
is seeking to refer the merger to the Competition Commission.
Several hospital trusts have also expressed concern about the
merger to the Office of Fair Trading, which considers referrals to
the Competition Commission. The OFT decided not to refer the
merger, but is reconsidering its decision after IBA won an appeal.
Although the OFT is not due to make a decision until 2 February,
Isoft and Torex have completed the merger.
Under deals awarded by the national programme in December, Isoft
and Torex, as a single merged company, signed contracts in three of
the five "cluster" areas that cover England.
Before the contracts were awarded, Isoft and Torex had 44% of the
NHS market in electronic patient record systems.
Patrick Cryne, chief executive officer of Isoft and chairman of the
merged group, said the potential benefits arising from the merger
"outweigh the potential implications of an adverse outcome of the
competition review process".
Executives at Isoft said that, at worst, any referral to the
Commission could lead to the company being ordered to sell off
parts of the business. But this was unlikely, they said, because by
the time any decision by the Commission was taken Isoft was
scheduled to deliver systems and services as part of its
contractual commitments.
A spokesman for Isoft said the company was taking a "calculated
risk" by merging before the outcome of the OFT's deliberations was
known, but he added that it was in the best interests of the
company, its shareholders and the National Programme for IT in the
NHS to do so.