Insider view: Jon Hoeksma

Interminable contract negotiations between the Department of Health and CSC over the future of Lorenzo in the North, Midlands and East have been a feature of the National Programme for IT in the NHS for almost a decade.

But a conclusion of sorts may finally be looming. The current round of negotiations, which have been going on for about two years, are due to complete by the end of August; when the current ‘standstill’ agreement between the DH and the company runs out.

Long-term observers might question how realistic this deadline is when so many have sailed past unmet. But there are reasons to think this one might just mean something.

So long Katie Davis

First, Katie Davis, the departing managing director of NHS Informatics finishes at the end of August. EHI understands that she is determined, unlike her predecessors, to resolve the big NPfIT unfinished business.

This will give NHS Commissioning Board patient information supremo Tim Kelsey a clear run at delivering the new NHS information strategy in tandem with the ‘new’ Health and Social Care Information Centre.

Davis appears to be just about the last person left standing in Whitehall who is motivated to reach a compromise on the Lorenzo, CSC, NPfIT contract problem.

Those thinking about their future career tend to deny all knowledge or it, or treat the subject as a smoking toxic pit they’d rather not linger around.

CSC needs a deal

Second, eHealth Insider understands that CSC is now primarily concerned with securing a deal that avoids reputational damage.

Back in March, agreement looked close. CSC announced that it had signed a non-binding letter of intent to establish high-level principles about contract scope. This would have delivered what the government called “savings” of around £1 billion on CSC’s £3 billion contract.

But no contract was signed, and by June the letter of agreement timed out. Since then, the company has been warning investors that it may not get a new deal at all.

In June, it said: “There can be no assurance that CSC and the NHS will enter into the interim agreement or any amendment to the existing agreement or, if the parties do not enter into the interim agreement or an amendment by 31 August, that the standstill agreement will be extended.”

The terms on offer also appear to have deteriorated. Despite this, retaining any kind of deal now appears to be the priority; even if it is for only a fraction of the original contract value. The company wrote off £1 billion against the NPfIT contract in January; more may yet have to follow.

Looking for the Lorenzo 22

As EHI reported last week, any new deal that is signed is expected to be based on the delivery of Lorenzo to a target of 22 NHS trusts; or less than a third of the number of trusts to which CSC had been due to deliver as recently as 2010.

However, it is probable that CSC would have no volume commitment at all. Instead, it would have to sell Lorenzo into trusts directly. Whether this would be done via open procurement is unclear.

Sources indicate that trusts would be able to call down central NPfIT funds to pay CSC once it had successfully implemented Lorenzo.

Fortunately, CSC has bought some commendably loyal iSoft customers, which it acquired when it bought iSoft and its big, installed base last year.

There are also trusts that would still like to take Lorenzo, and remain willing to wait until it becomes available and stable. South Warwickshire NHS Foundation Trust is one such trust willing to wait.

This is not as surprising as it might sound. Parts of the Lorenzo product are said to be very good; although it’s still not regarded as mature or ready for wide-scale deployment.

The key hospital reference site, University Hospitals of Morecambe Bay NHS Foundation Trust, seems keen on the system despite initial problems, and is extending its use and opening up the information it holds to its healthcare community.

Unfortunately, the trust is in crisis recovery mode for reasons that have little to do with its electronic patient record system.

The first mental health ‘early adopter’, Humber NHS Foundation Trust, has also expressed enthusiasm for the system and for getting as many modules as possible – including those that would take it mobile.

On the other hand, the mental health trust originally slated as the ‘early adopter’, Pennine Care NHS Foundation Trust, is now involved in an alternative procurement, and has absorbed NHS Bury, one of the community provider arms that took Lorenzo, which now looks likely to turn it off.

Free but expensive?

Lorenzo being ‘free’ software remains a pretty good selling point; albeit one that other suppliers might perhaps now be willing to legally challenge. However, trusts still need to invest heavily to implement the software.

Unless they are convinced by the product and the implementation track record many may look at the balance of business risks and opportunity costs and consider even ‘free’ to be too expensive.

Unsurprisingly, a good number of trusts like South Warwickshire remain uncommitted but still willing to be convinced. South Warwickshire itself has said it wants the product – but doesn’t want to be in the first wave of five being lined up to take it.

While sources close to CSC say that the next five Lorenzo trusts have been signed-up, the figure of 22 defies belief. Also, the five were meant to have been signed-up in March, five in September, and 12 by the end of March 2013, so the spring timetable has already slipped.

Time and again over the past decade delivery schedules for Lorenzo by CSC have had only the most fleeting acquaintance with reality. Any new deal must at least be believable.

Rather than 22, ten or even five further NHS sites for Lorenzo might be more credible.  

Fast losing ground in the NHS IT market

Whatever is happening in the CSC/DH contract negotiations is quickly being overtaken by facts on the ground. 

Because in the meantime, the NHS IT market is moving quickly. The largest market refresh in a decade is underway, with trusts going out to tender for PAS and EPR systems, departmental solutions and for technologies like portals to support a ‘best of breed’ approach.

In short, in the two years CSC has been in limbo with the DH and NPfIt has unwound the world has moved on, and CSC looks in sever danger of being left  behind.

Cerner sites are showing progress on clinicals. McKesson-owned System C has had an amazing run of PAS-replacement and EPR-foundation wins and shown it can deliver.

Meditech and Epic have both entered the market. InterSystems and Orion have shown their capabilities in Scotland.

ISoft, in its new guise as part of CSC’s healthcare group, remains the largest installed hospital clinical IT supplier in the country. But increasingly that looks like a legacy business that will be eroded.

CSC is simply not winning big new PAS/EPR open procurements, even if it is winning additional business in areas such as e-prescribing and labs.

Unless it finally resolves its position, CSC risks being held prisoner by its legacy of NPfIT contracts, while others make the running in the vibrant new NHS IT and information market. The end of August may be its last best chance to break free. It’s not an enviable position.