LSP Contracts to Have No Immediate Financial Impact Locally

NHS Chief Executive, Sir Nigel Crisp has written to all NHS chief executives stating that the Local Service Provider (LSP) contracts due to start being signed in the next few weeks will have no immediate financial impact on local NHS organisations.

He also notifies chief executives that he will sign the five contracts to be awarded to LSPs, and pass on responsibilities entered into in the contracts to Strategic Health Authorities (SHAs), and through them individual NHS organisations.

The 12 September letter, seen by E-Health Insider, first reminds chief executives that SHAs first agreed to a national approach to NHS IT at an April 2002 meeting. It then announces: “I will pass the responsibilities so entered into by those contracts to each of the 28 SHAs, by direction.”

According to the letter this arrangement “will eliminate the need for any further legal or technical evaluation of the contracts, at a local level.”

The letter further specifies that SHAs will be responsible for ensuring that each individual NHS organisation in their geographical area “would meet any reasonable expectations of such a contract.” What such reasonable expectations may be, however, is not specified.

The NHS chief executive explains that the approach he sets out will allow a co-ordinated national approach, and “eliminate the need for each statutory organisation to seek legal or technical advice on the National Programme contracts…,” together with providing the “necessary cover” for each organisation under due diligence.

The new arrangements only apply to the national programme. Business cases and contracts for IT services and suppliers outside the national contract will continue to be the responsibility of individual NHS organisations with standard rules applying.

On the vexed question of how much of the local implementation of the national programme will depend on local investment being found, the letter appears to offer some reassurance, stating that the national programme will have no ‘immediate impact’.

“It is important to note that the national contract and procurement catalogue have no impact on the immediate financial position of constituent authorities, or organisations, as they are either fully funded or in the case of preferred solutions world-class and value for money, to be implemented only when agreed within the financial and information strategy of those organisations.”

The letter would seem to suggest that while the core national solutions to be provided by the national programme will be fully funded nationally, those elements of the programme that will have to be funded locally will only have an impact when the individual organisation actually begins implementation. In other words, there will be no immediate financial impact on local NHS organisations, so long as they don’t implement anything locally.

One experienced NHS IT director told E-health Insider “I think the letter it is a deliberate attempt to say as little as possible in a clear way as I have come across – ‘Yes Minister style’”.

He said that his best guess was that ‘fully funded’ would apply to the products in an LSP catalogue, suggesting there will be an, as yet unspecified, process of Trusts and local health communities picking from the LSP catalogue what they need.

“What will not be funded is implementation, training NHS project management, ongoing first line support on a 24/7 basis, maybe peripherals and other local hardware and infrastructure,” added the NHS IT director.

He also questioned how the statement on the programme not having an immediate impact on local funding could be squared within the LSP contracts now being negotiated. “If LSPs provide it, and it’s fit for purpose, but local NHS organisations do not use it, where will they get the revenue? Will they not have contract clauses that go after the NHS for non use?”