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DoH aims to save £220m with back-office system

The Department of Health has embarked on its second effort in two years to create a shared back-office services organisation for...

The Department of Health has embarked on its second effort in two years to create a shared back-office services organisation for the NHS.

The DoH last week announced a joint venture with IT services company Xansa to offer NHS trusts a centralised service to carry out work such as payment of invoices, VAT returns, debt collection and bank account reconciliation.

Xansa will receive £16m of NHS assets under the joint venture partnership, called NHS Shared Business Services. The service will offer trusts guaranteed savings of 20% on existing in-house costs, with the cost to users decreasing at 2% thereafter for three years.

A DoH spokesman said if the service was used by half of NHS organisations, savings would reach £220m over 10 years.

In 2002 the DoH launched NHS Shared Financial Services to carry out back-office functions and promised it could save the NHS £180m a year.

A spokesman said the project never got beyond the pilot stage and that an independent review recommended a joint venture with the private sector. The DoH refused to publish the review.

Paul Goss, director of consultancy Silicon Bridge Research, said that although the new joint venture's anticipated savings were "modest", they might be threatened by a major overhaul of NHS finances, Payment by Results, which would require additional investment in IT systems.

"The NHS is unlikely to achieve these savings and spending on financial systems is more likely to rise," he said.

NHS Shared Business Services could expand its offering to e-commerce and payroll, the DoH said.

In December 2001, the NHS signed an outsourcing contract with a consortium lead by healthcare supplier McKesson to build and run an NHS human resources and payroll system in a deal worth about £300m. It was due to be delivered this year.

The department spokesman said the McKesson system was working and was being rolled out in the NHS. "The payroll package being considered by the joint venture is the McKesson software," he said. He did not make clear which organisation would be hosting the software.

Goss described the NHS strategy on the payroll system as "a mystery". "It has been more problematic than anybody hoped but is still ongoing," he said.

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