Prepare to jump through hoops for us, NHS IT tsar warns suppliers

Following the NHS IT tsar's speech to suppliers last week, experts have warned him to ensure that the procurement strategy for...

Following the NHS IT tsar's speech to suppliers last week, experts have warned him to ensure that the procurement strategy for NHS IT will not destroy the smaller suppliers that provide a valuable skills base. James Rogers reports

Richard Granger, the NHS IT tsar, recently warned suppliers that they will have to demonstrate the qualities required for the Government's ambitious plans to overhaul NHS IT. This has highlighted some of the difficulties the multi-million pound investment programme will present.

Modernisation of the NHS, which was a key part of the Labour manifesto in the last two general elections, depends on installing 21st century IT. The prime minister has already complained that too many of the UK's public services languish in a technological "dark age", and his planned multi-million pound reform of NHS IT aims, in part, to resolve this.

The Department of Health is devising an IT procurement strategy to underpin the new national programme for NHS IT, which was expressed in a strategy document, Delivering 21st Century IT Support for the NHS, published earlier this year.

Key elements of the IT strategy include delivering national services for electronic bookings and integrated care records, as well as managing improved procurement.

Details about the long-term direction of NHS IT procurement will be made available in January, according to the Department of Health. Granger recently told a closed meeting of NHS IT suppliers that the Government is in the final stages of refining the strategy.

Developing a technology procurement model to fit the whole of the NHS, however, is far easier said than done.

The NHS, with more than a million employees, is an extremely complex organisation, composed of hundreds of trusts, health authorities and primary care services offering a range of specialisations.

Accordingly, the range of suppliers that currently provide the health service with critical IT products, services and expertise is also varied, from technology giants such as IBM and EDS down to myriad smaller, specialist firms.

Many of these companies have accumulated a wealth of experience in health service IT after years of supplying the industry. The success the Government's programme will depend on a certain degree of buy-in from these suppliers.

One thing is certain: suppliers will be subject to stringent checks when the new NHS technology procurement strategy is implemented. Speaking to an audience of health service IT suppliers in London last week, Granger warned them to expect to jump through more procurement hoops. "There needs to be a greater emphasis on suppliers fully demonstrating their ability to play a major part in delivering the largest civil IT programme currently under way," he said.

But while the attempt to streamline procurement could save millions for the taxpayer, it also runs the risk of alienating suppliers, something that could have a catastrophic effect on the future of NHS IT.

One hardware and applications supplier, which asked not to be named, said, "If the rules and the parameters around procurement for the new IT plan are too strict it will not be successful." It could frighten the private sector off, he added.

Since the Government announced plans to overhaul NHS IT procurement earlier this year, suppliers have been anxiously awaiting details of the format of the new strategy. Murray Bywater, managing director of IT healthcare specialist Silicon Bridge Research said, "The Government's announcement of its new strategy has thrown the market into confusion."

There is also a feeling that the longer this uncertainty lasts, the worse the impact will be, particularly on the smaller specialist suppliers, which do not have the financial muscle of the likes of IBM. There is also a very real risk that if the smaller suppliers disappear they will take with them an invaluable IT skills base. Because of the unique way the NHS is run these skills would be difficult to replace in the short-term.

Bywater said, "If you lose the smaller companies, there is a risk that it could impact on the support of existing systems. It could cause us to lose some critical skills and also a source of the innovation and inventiveness that you get from smaller firms."

If the NHS fails to take these smaller companies into account it could drive the skills base abroad. "The US market, in particular, is much more open and fast-moving. The danger of a monopoly market is that if it changes direction it wrong-foots everyone who has been supplying it," he said.

In many respects, the NHS is simply falling in line with the rest of government by attempting to streamline its procurement strategy.

Earlier this year, for example, the Office of Government Commerce (OGC) announced a major public sector software deal with Microsoft, Sun Microsystems and IBM/Lotus.

Aggregation of demand for IT products offers Whitehall an opportunity both to save money and to implement wide-ranging technology standards at a time when public services are becoming increasingly e-enabled. With deadlines set for the implementation of electronic health records, for instance, the NHS is part of this trend.

Perhaps not surprisingly, then, Granger told the supplier meeting that a major component of the procurement strategy will be to verify the performance, scalability, and interoperability of their software offerings. The accreditation of products through the national procurement programme will be a pre-requisite to their deployment within the NHS, he added.

Software suppliers, however, have warned that the strategy must also take account of their profit margins. Ian Howells, vice-president of marketing at See Beyond, a supplier of specialist software to the NHS said, "The key thing, if you are a software supplier, is that they have to make it profitable for us to sell into - if they make it almost impossible to sell into they will end up with second-division software.

"They need to set up a framework that's a win for us and a win for them," he said.

Although the exact nature of the procurement strategy is still unknown, Granger has already told suppliers that a new framework will be established which will transfer "business capacity" to those suppliers that perform and that "payment will be made by results".

Evidently, the new IT tsar is keen to stamp his authority on the supplier community from day one.

The challenge for Granger is to devise a strategy that fits the patient, the taxpayer, his political masters in Westminster and also the health service's existing technology suppliers.

"It is correct that a more heavyweight approach to procurement has to be introduced, but it has to be done in a careful way to ensure that the existing market structure is not destroyed," said Bywater.

Delivery targets for modern NHS IT
Priorities outlined in the IT strategy document include:
  • Defining national standards and specifications
  • Managing improved procurement
  • Developing IT industry relations and partnership to increase IT capacity for the NHS

Key targets for 2002/2003, including connecting all NHS clinical and management staff to enable e-mail, directory services and Web browsing and ensuring electronic transfer of test results. Government strategy also aims to change IT procurement at a local and national level.

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