Supplier rationalisation could undermine user confidence in national programme

Merger highlights problems of balancing of user choice with economies of scale.

Merger highlights problems of balancing of user choice with economies of scale.

When billions of pounds worth of contracts were announced in December under the NHS national programme for IT, marketing executives at systems supplier iSoft were surprised at the extent of the company's success.

iSoft won deals to supply key clinical systems in the North West, North East and East - three of five geographic "cluster" areas that cover the population of England. It could also be part of the consortium that wins the fifth contract, in the South, which has yet to be announced.

Recently merged with Torex, another major supplier of healthcare systems, iSoft is expected to deliver systems into hospitals and other healthcare organisations, including GPs' surgeries, that will displace those from a variety of its competitors.

Some suppliers and trust IT managers are concerned that the merger of two such powerful companies, given a strong tail wind from the rationalisation plans of the national programme, will create in effect a monopoly. This could contribute towards suppliers leaving the UK healthcare market. Computer Weekly has learned that at least 100 suppliers could go bust, leave the UK, or move into other markets as a result of the national programme.

Roger Wallhouse, director of health IT strategy consultancy Health Systems Solutions, who has given evidence to the Office of Fair Trading on the merger plans of iSoft and Torex, said that, in the end, NHS trust users "may well have no choice as to their suppliers".

Duane Lawrence, general manager of Misys Healthcare Systems, has given written evidence to the OFT on the merger. He said, " It seems that competition will be greatly reduced in England due to the national programme for IT. Vendor selections have been made throughout the remaining consortia and contracts will be tied up for up to 10 years."

He said that, in theory, there may be a "monopoly position in each cluster" once the national programme has awarded all the contracts.

iSoft's success in winning contracts under the national programme - the stated aim of which is "ruthless standardisation" - highlights an argument in the IT industry and medical profession over whether the benefits of having a smaller number of suppliers providing standardised systems outweighs the disadvantage of a reduction in choice of systems for clinicians.

iSoft and other major suppliers to the national programme are expected to replace systems in the three main areas of NHS IT activity: electronic patient records, departmental systems in areas such as radiology and laboratory, and equipment for use by GPs.

Some executives working on the national programme say it is better to have quality than quantity. Citing the success of iSoft, they say taxpayers, clinicians and patients will benefit from having a small number of standard systems in the NHS, supplied in the main by local service providers (LSPs). The LSPs' 10-year outsourcing contracts will ensure that quality and prices are subject to rigorous scrutiny at central or regional level by the national programme.

This is better for taxpayers and clinicians, they say, than giving trusts financial freedom to buy systems from a host of different suppliers, even if these products are subject to national standards on quality and pricing.

The conflicting arguments over whether the rationalisation of IT suppliers to the NHS is a good or a bad thing for competition has been examined in detail by the OFT, which is considering whether to refer the merger of iSoft and Torex to the Competition Commission.

Several hospitals commented to the OFT that the merger was consistent with the aims of the national programme. But others expressed concern that the merger of iSoft and Torex would lead the firm to "abandon some of their [existing] systems and this would increase hospitals' costs in migrating to new systems or decrease the usefulness of the system [if it was not well supported]".

The view of clinicians does not feature strongly in the OFT's deliberations, yet the opinions of doctors generally on whether they would be willing to sacrifice their familiar departmental, patient record and GP systems in favour of equipment and software from LSPs is a critical issue for the national programme.

One urologist was asked by Computer Weekly whether he would give up his departmental system, on which he keeps detailed records of his patients' care and treatment, in favour of a standardised system which had less-detailed information but was accessible nationally, cost less to support and was of guaranteed quality. He said, "All that matters to me is the care and treatment of my patients, not the common good."

Some doctors will welcome the advent of national compatible systems and the savings that should arise from buying IT in bulk from LSPs. Others may become disenchanted with the national programme if they are asked to replace the useful familiar with the less-useful unfamiliar.

Members of the British Computer Society's Health Informatics Committee say the buy-in of clinicians is essential to the success of the national programme.

But the question that cannot be answered yet is whether the rationalisation of suppliers will antagonise the very clinicians whose support is most needed for the national programme to succeed.

How big guns may kill off competitors     

iSoft and other major suppliers to the national programme are expected to replace hundreds of systems in the three main areas of NHS IT activity.   

Electronic patient records:  iSoft and Torex have 44% of the existing market. iSoft is the chosen supplier to three of the four LSPs already announced.   

Specialist hospital systems: iSoft and Torex supply 56% of laboratory information management systems, for example. The combined firms have 100% of the laboratory market in Scotland and Wales.    

GP systems:  One stated aim of iSoft's merger with Torex is to become a provider of healthcare information systems "across the full spectrum of the healthcare market, from the GP's surgery through to the clinicians in hospitals and ancillary services".

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