No pleasure in Accenture losses, says Granger

Richard Granger, NHS director-general of IT, jokingly told conference delegates today that the $450m losses one of his prime contractors, Accenture, announced this week against its National Programme for IT contracts would be sufficient for the firm to hire “every Bulgarian hit man to take me out”.

Speaking at the World Health Congress, Paris, he said that it gave him “no pleasure” to see suppliers to the NHS IT programme incur such losses, but added: “Better a well capitalised organisation than a public sector organisation.”

Granger said that the ‘holy trinity’ of success in the IT industry was delivering projects, “on time, on budget and to requirements”. “Our success on these three is variable,” he said. “Some things have gone well, some have gone less well.”

Saying that deployment was now “quite well established” Granger said he would now look at revisiting some of the contracts with suppliers. “We will start to look at whether we should be reconfiguring some of our payment arrangements with some of our contractors.”

The NHS IT director-general said that one of basic core elements of his procurement strategy and the contracts signed with suppliers were the “fundamental failure clauses in all our contracts”, “these mean that we will get money back if it [the asset] doesn’t work… up to 50% of the value of the contract”.

This meant that if any supplier struggling to deliver now wanted to walk away, they would have to pay dearly for the “disruption” caused. “If they would like to walk away, it’s starting at 50% of the total contract value.”

He said that balanced against this was the fact that once they’d got through the build phase most suppliers then have long service contract.

Referring to the picture archiving and communication system (PACS) contract awarded to CSC, which sub-contracted with ComMedica and Kodak, for the North West and West Midland (NWWM) region of the NHS he said. “In NWWM the contractor failed, that sub-contractor may now cease to exist.” Granger said the programme now had “a replacement contractor moving in soon”.

He defended the NHS IT procurement and contracts by contrasting them to PFI projects “where banks are in charge of IT projects. And banks have a very variable record on successfully delivering IT projects,” said Granger. “The only thing that is guaranteed is that the banks will get paid.”

He said that the model applied to the NHS had been based on his experience with congestion charging, “where we came up with a new model where the people doing the work took the completion risk”. Granger added: “The IT industry has not been used to working that way.”

“In some cases some of those risks have materialised,” said the NHS IT director. He stressed that suppliers could not start billing and getting money until they “build an asset which then delivers benefits”.

In addition, suppliers must pay penalties if they are late in delivering systems. “The supplier pays to build the asset and if they are late they pay again,” said Granger. He said these two pronged incentives gave the NHS’ main suppliers a very strong incentive to go out and buy the necessary additional resources they needed to overcome delays, in the same way he said Capita had been forced to do on congestion charging.

Lambasting the wider IT industry, he told the audience that included many senior IT executives, “The IT industry pretends to be a mature industry but it isn’t; that’s a complete fantasy.” The evidence he offered for his attack, was that “there is not a single IT contract in Europe that has been securitised.”

“There’s a lot of marketing flim-flam about guaranteed delivery, but it just not true. That’s the complete opposite to how it really is.”

Illustrating the discounts he has secured with leading suppliers, Granger recounted, “Me and Bill Gates fell out over the disparity between what we are paying now and what we do now.” He added “I’m glad to say Larry Ellison and I did not fall out.” As a result he claimed the NHS was paying about the same for Oracle across the entire service as a single large trust had previously paid.

Providing the audience with an overview of NPfIT achievements he said that, as of Tuesday, the half-way mark had been passed in the South of England on the implementation PACS. He added that if he were starting over again PACS would have been top of his list of deliverables, to help convince clinicians of the benefits of new IT systems.

QMAS, N3, Choose and Book, GP2GP record transfers were also highlighted, as was the Electronic Prescription Service, which Granger said would soon begin to be rolled out to communities of a 1,000-plus pharmacists.

However, while taking great pains to emphasise what the programme has achieved the director-general failed to make even a passing mention to the failure of the programme and its suppliers to deliver the core strategic, integrated clinical record solutions. NHS CRS was not referred to once, nor did it feature on his implementation slides.

Instead, Granger stressed that three and half years ago when he took the job he inherited an already determined road map called ‘Delivering 21st century IT support’. “The people who put this together were of the opinion we could get it done within five years.”

Professor Paul Corrigan, the Prime Minister’s special advisor on the NHS, added that new incentives were needed to ensure the adoption of new systems. “The way we thought of this contract was as top down in nature. What we are realising is that it means nothing unless you have the right incentives.”

Granger confided with the audience that he still questioned his judgement about taking the job, a job that he said “has taken me to hospital in more ways than one over the past 3.5 years”.