Tola Sargeant, an informed commentator at Ovum on the healthcare IT market, says that after years of "blight" in healthcare IT caused by the National Programme for IT [NPfIT] the smaller companies have "more reason to be positive about the sector than they have had for a long time".
Some opportunities for suppliers are presented by trusts which may "replace their legacy PAS [patient administration system] outside NPfIT".
"Several SMEs in the UK healthcare IT market have made strategic moves over recent weeks that suggest both the companies and their private equity backers believe there are now opportunities for SMEs in the market despite the National Programme for IT in the NHS (NPfIT).
"Developments in the sector such as Fujitsu's untimely departure from NPfIT and the government's strategy for primary and 'out of hospital' care are creating a few opportunities in the sector for non-NPfIT suppliers. Competition will be stiff, however, and suppliers need to be prepared for a long haul.
"Now is the time for healthcare IT SMEs in the UK to make a move. After years of 'blight' caused by the big national NPfIT contracts, which made it very difficult for SMEs that were not involved in the £12 billion programme to win business, SMEs now have more reason to be positive about the sector than they have had for a long time. As a result, the last couple of months have seen a string of announcements from small healthcare IT firms in the UK as they look to strengthen their position in the market.
"At the end of August, UK healthcare IT firm Stalis announced plans to merge with partner Silverlink in a move funded by Stalis's current private equity investors HSBC Corporate and Structured UK. Stalis is known for its data migration and patient data repository software, CareXML, while Silverlink's patient administration system (PAS) PCS is implemented in 18 NHS Trusts (and also supplied by iSoft as ICS).
"Together the two companies claim to be able to offer an end-to-end service to trusts wanting to replace their legacy PAS outside NPfIT. This month also sees Adastra Software, the dominant supplier in the UK out-of-hours care application market, acquired by Drury Lane Capital - an AIM-listed investment 'shell' backed by Vinodka Murria and Michael Jackson - for £12.2 million (£4.8 million in shares and the rest in cash). The company, which will change its name to Advanced Computer Software when the deal goes through, is hoping to build a strong position in the primary and emerging 'out-of-hospital' care market.
"Acquisitive AIM-listed healthcare IT firm Ascribe has also confirmed that it is in preliminary talks with its executive directors regarding a possible management buyout. Ascribe will also be hoping that delays to NPfIT and renewed interest in 'interim' systems present an opportunity for it to take market share.
"Fujitsu's exit from NPfIT will, at the very least, lead to a lull in the deployment of electronic patient record (EPR) systems in the South of England. At the moment, it looks likely that trusts that were waiting for a system from Fujitsu will be offered a choice of system from either BT, the Local Service Provider (LSP) in London, or CSC (the LSP in the North, Midlands and East of England).
"But it will be some time before the details are finalised and in the meantime some trusts may decide they cannot afford to wait for an LSP system and instead procure an interim or replacement system from alternative suppliers such as Stalis or Ascribe.
"However, competition for any such contracts will be stiff and small UK SMEs such as Stalis will be competing against much larger international rivals that are also targeting the UK market..."
Newcastle foundation trust quits the NPfIT ship - Computer Weekly, September 2008
NPfIT break-away trust reveals business case details - IT Projects blog, Sept 2008
NPfIT in the south - interim CIO outlines interim plan - IT Projects blog, Sept 2008