NHS opts for national e-commerce system to manage £11bn spend

The National Health Service is rolling out one of the world's largest financial and e-commerce solutions to manage its £11bn...

The National Health Service is rolling out one of the world's largest financial and e-commerce solutions to manage its £11bn annual procurement budget.

The NHS Information Authority (NHSIA) is inviting tenders for a managed service covering the Department of Health and its agencies, all health authorities and NHS Trusts, primary care trusts and "any other public sector health related organisations" in England. It expects to award the contract in June 2003.

Julie Armstrong, director of finance at the NHS Shared Services Task Force, which developed the business case for the project, was blunt about the need for the system. "We don't know how we spend our money. We don't know what the Trusts are buying," she said.

Armstrong added that the system, "will give us the details we need to negotiate with suppliers as the whole NHS".

She rejected suggestions that the move would centralise purchasing. "It is not about saying to trusts 'you will buy this or that,' it will simply give us the information to negotiate consolidated purchasing deals," Armstrong said. "We want to be able to say to trusts, 'here are a range of nationally agreed deals on price and quality. If you use them you can save money'."

Health service purchasing is extremely decentralised, with 10,000 requisition points. Bringing procurement into one centralised system will be an enormous undertaking, Armstrong said.

The NHS is looking for a consortium of suppliers to "provide innovative ways of operating and funding the project".

"We want the private sector to fund the project upfront with payment coming from cost savings and revenue streams developed from the system," Armstrong said.

The NHS hopes that the project will be cash neutral in its third year and cash positive in year four. However, the health service will be flexible about the cost and length of any contract. One of the companies that are expected to bid told CW360.com the bill could come to hundreds of millions of pounds over ten years.

Steve Dempsey, a partner at management consultants Accenture, said: "It will be interesting to see how this (proposed system) sits alongside e-procurement initiatives at NHS trust level. Is the expectation that the new system will be consistent with the local e-procurement systems that are being developed, or will things done locally have to be replaced?"

Murray Bywater, managing director of health IT analysts Silicon Bridge Research, said the biggest problem, as with any enterprise resource planning (ERP) implementation, could be in getting NHS organisations to adapt existing working practices to the new systems.

Armstrong insisted, however, that the NHS was determined to learn from ERP implementations in other industries, from existing e-commerce projects within the NHS and from the development of its own electronic staff records project.

Read more on Business applications