Small-scale NPfIT look-alike in Australia is in trouble

Comment: Whitehall health officials should read the report of the Auditor-General in Victoria, Australia, on the state’s “Healthsmart” project. The delays and problems are similar to those on the NHS’s National Programme for IT. For example officials have spent less on the Australian programme than predicted because of delays in the delivery of core systems. Yet Healthsmart is far less ambitious, less complex. And it costs only about £150m. Which raises the question: Is the £12.4bn NPfIT too ambitious? The HC2008 Healthcare Computing conference at Harrogate learned this week that the NPfIT is set to become even more complex.

Australian IT, part of The Australian news group, has today [22 April 2008] reported on problems with a $320m [£152m] Healthsmart project, based in part on Cerner clinical systems.

The Healthsmart project was launched in Victoria, which is in the south-eastern corner of Australia and is the most densely populated and urbanised state. Healthsmart is described by the state as a “whole-of-health ICT strategy”.

Australian IT said:

“Victoria’s troubled $320 million HealthSmart project has failed to get the cornerstone Cerner clinical system working at any of its sites, and has replaced only one of 10 Homer hospital systems, which were obsolete when the program began four years ago.

“Auditor-General Des Pearson said HealthSmart was at least two years behind schedule and more than half of the budget had been spent with only 24 per cent of the planned installations complete.

“In a long-awaited review, Mr Pearson said the original budget, which involved health agency co-funding, was not realistic, and the targets were too ambitious.”

It added that Victoria’s Human Services Department and the Office of Health Information Systems has “consistently deflected concerns raised in the state parliament by vendors, industry observers and even an anonymous group of healthcare workers”.

In the UK ministers have been defensive over criticism of the NHS’s NPfIT.

In Australia, the Auditor-General found that the project judged most at risk, but with the greatest potential benefit, involved Cerner’s Millennium clinical suite, which included health records, electronic scheduling, diagnostic services, results reporting, and e-prescribing capabilities.

“The first release of the clinical system has been tested by various user groups and is ready for use, but none of the four lead agencies have committed to using the new system,” said Australian IT, quoting the report of the Auditor-General.

“According to the original timelines, the acute hospitals in 10 health agencies should be using clinical systems by now, but even if funding negotiations are concluded shortly, the first four agencies are unlikely to meet the June 2009 completion date.”

A $79m deal with Cerner was signed in March 2006 but costs rose by $17m to $96m in 2006. Cerner declined to comment to Australian IT, citing contractual obligations.

Australian IT added: “Replacement of the antiquated Homer hospital system with a modern Patient and Client Management System has also been fraught. HealthSmart initially signed a $50m contract with local firm iSoft in 2003 to replace the legacy system with iPatient Manager, an “interim” product that would in turn be replaced with Lorenzo, a highly capable next-generation suite.”

ISoft has been taken over by Australian healthcare specialist IBA Health.

Communications director Greg King told Australian IT that IBA Health was “comfortable tracking to the time frames set by HealthSmart” for completion in 2009.

King added: “The procurement process took longer than expected and the project started nine months later than anticipated, so the department, lead agencies and we as vendor are doing quite well catching up.”

He said that IBA Health has nine lead agencies in its portfolio. “We already have three live, we have one in implementation and two others are in the planning stage, so we’ve only got three sites pending.”

In a statement on his report Pearson said that despite its problems Healthsmart has the “potential to fulfil the original vision of a patient-centric model of healthcare, supporting public sector health clinicians with knowledge and technology”. Pearson added: “However, to date, that vision has yet to be fully realised.”

Pearson described Healthsmart as “large and complex, involving health services, rural information and communication technology (ICT) alliances and community-based health providers across Victoria”. He added: “It is the most far-reaching ICT change program ever undertaken by the Victorian Public Health System.”

The project aims to replace obsolete and unsupported applications within health care agencies, with “capable, industry standard products”.

The Auditor-General’s main audit findings on Healthsmart:

– The original milestones for the programme have proven to be too ambitious, requiring periodic revision as the project proceeds. “Our analysis also indicates that the programme will not be finalised by its planned completion date of June 2009”, although there’s no new completion date. With the NHS’s National Programme for IT there is no completion date; and there have been regular revisions of software delivery dates.

– Implementation of the programme component providing the largest benefits is most at risk. [The same finding was made by the UK’s Public Accounts Committee on the NPfIT.] In Victoria, the delay in implementing clinical systems is more than a project management and scheduling issue. Opportunities to realise benefits and reduce costs have also been delayed. Failure to implement clinical systems is a serious issue for DHS [Department of Human Services] and the health sector in terms of delivering the expected outputs and benefits of the Healthsmart programme.

– Half the budget has been spent for a quarter of the planned installations. DHS had spent $184m of the approved Healthsmart project budget as at December 2007. This is about 57 per cent of the original $323 million allocation. There has been significant planning, preparation and procurement activity and effort undertaken by OHIS [Office of Health Information Systems]. At present, 24 per cent of the planned application installations are complete, with the shared services environment and supporting ICT technical infrastructure fully operational.

– Implementation delays have led to underspend against forecasts – which has happened on the NPfIT. The Australian Auditor-General said: “At the current rate of implementation, the Department of Human Services will not be able to use all its allocated capital by the current planned programme completion date of June 2009.”

– The Office of Health Information Systems does not have a reliable basis for estimating agency expenses nor does it monitor agency expenses for the Healthsmart program. Therefore, there is doubt as to the reliability of its cost to completion forecasts and reporting on actual expenditure (sector-wide). Although it is unlikely that any final accounting of the programme will be able to capture its full cost, it is clear that the additional contribution by DHS to the programme is at least 14 per cent over

– The lack of a whole-of-programme business case has been a key flaw in the planning for the program. In the UK, Sir Derek Wanless has pointed to the lack of a measurable and published business case for the NPfIT.

– DHS had an inadequate baseline analysis or process to demonstrate that the program would be viable, or provide value-for-money, with benefits from the programme exceeding costs. Due to this deficiency, a number of implementation issues that could have been forecast or analysed in a business case have now manifested themselves during the life of the programme. Health agencies and the state are now having difficulty committing to additional ICT investment, such as enabling works, which are prerequisite to the effective implementation of clinical systems, due to the absence of a state-wide clinical systems business case.

– Health agencies have been able to realise benefits from the implementation of the Financial Management Information Systems, Human Resource Management Systems and Patient and Client Management Systems applications. Some obsolete systems have been replaced and others are being replaced. Many agencies have taken up the opportunity to improve the way they do business.

– DHS did not have a reliable basis for estimating ‘whole of life’ costs arising from the programme, or for defining agency contributions. It also did not seek to identify whether agencies were able to meet their anticipated contributions. This means that DHS was neither in a position to accurately estimate the total cost of ownership of Healthsmart systems and infrastructure, nor to estimate what level of contribution should, or could, be made by health agencies.

– There is currently no source of sustainable ICT investment for health agencies. Adequate funding of ICT infrastructure within health agencies is an ongoing challenge within the sector, as ICT competes for funds with general medical equipment, which is given priority due to its clinical ‘patient facing’ usage. If the past patterns of ICT underinvestment continue, some agencies will not be able to keep their infrastructure up to date and are at risk of not fully benefitting from the investments made through the Healthsmart program.

– Adequate governance structures have been established. DHS has placed significant emphasis on the governance and management arrangements for HealthSMART. The governance structure and the presence of senior departmental and agency representatives has also enabled frank and open discussions on risks and deliverables.

– Overall programme management processes are sound and the Program Management Office has adequate controls in place to coordinate their complex programme.

– Oversight of the programme could be strengthened if regular independent assurance on the progress of the programme was conducted. Although the endorsement of the Healthsmart funding submission was conditional on the program undergoing a series of Gateway Reviews at key decision points, only one of the five reviews required in the funding approval has been conducted to date. There has not been any internal audit activity conducted or planned for the program by DHS.

Recommendations. The report made nine recommendations relating to the need to:

• develop an evidence-based business case for the programme

• develop detailed plans for the implementation of clinical systems

• record costs and monitor them in a consistent manner.

• use a whole-of-life asset management approach to fund ICT infrastructure

• ensure independent assurance is sought on the progress of the program by conducting Gateway Reviews and internal audits.


Healthsmart project

Auditor General’s report on Healthsmart

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