Cerner confident of signing BT deal ‘soon’

Cerner says that it remains confident of signing a deal with BT “soon” to deliver its software to NHS trusts across London, despite problems in the south.

Mounting delays in delivering the initial Release Zero (R0) version of Millennium in the South of England have not dampened Cerner’s optimism about its future prospects for delivering systems in London and more advanced systems in the South from early next year.

In an earnings conference call last week, Cerner president Trace Devanny said of being selected by BT for London: “We expect to have this contract soon”.

“We are excited about this opportunity and believe our experience in relation to the Southern cluster positions us well for a fast start,” he said.

BT is next month due to announce its half year results and sources indicate that this provides a deadline being worked to for completion of a deal with Cerner.

The likelihood of a deal with Cerner, to replace GE Healthcare as clinical software supplier in the capital, was first announced by BT and the NHS in July. Protracted negotiations have been underway ever since.

GE Healthcare had inherited the position of incumbent supplier in London following its 2005 purchase of IDX Healthcare. BT is understood to need to first extricate itself from its existing contract with GE Healthcare before being able to sign with Cerner.

Since being awarded a £996m 10-year local service provider contract for London in December 2003 as part of the £12bn Connecting for Health programme BT has installed a new patient administration system – supplied by IDX – at just one hospital: Queen Mary Sidcup.

In the eleven months that have passed since QMS went live in November 2005, BT has not named which hospitals it will next install systems at, though in July it told the Commons Public Accounts Committee that three unspecified trusts would go live by Christmas.

In a reversal of fortune it now seems likely that BT intend to take a standardised version of Cerner Millennium tailored for use in the Southern cluster. At the start of the NHS IT programme BT had led the so-called ‘single solution’ project based on developing a single IDX-based solution for use across London and the South.

Fujitsu withdrew from the single solution project early in 2005, and instead awarded a contract to Cerner. Following an initial installation at Nuffield Orthopaedic Centre in December 2005 progress has slowed, with just two more implementations occurring. Fujitsu and Cerner had planned to deliver a dozen by the end of October.

Despite this, Paul Black, Cerner’s chief operating officer, remained resolutely upbeat: “Each go-live has proven to be smoother than the previous events as we show solid process improvement, leveraging experience from previous implementations. As a result we expect to continue to continue bringing one or two trusts live a month over the next several months.”

During the Cerner conference call Mark Naughton, Cerner’s chief financial officer, said: “The concept certainly would be that we would leverage the work we’re going to do through R-0 to R-3 in the London cluster and have the majority of that work be a carryover from the Southern cluster.”

Naughton also predicted the more sophisticated Release One of Millennium would be delivered in the South in the first quarter of 2007. This despite problems being experienced with the initial implementations of Release One, that have led to trusts having their implementation dates repeatedly delayed.

Elsewhere on the call Naughton said that the revenue from the Southern cluster contract was split “about 20% to system sales and 80% to support maintenance and services, while the expenses were split approximately 80% to sales and client services, and 20% to R&D”.

He added that the value of the Southern cluster contract with Fujitsu, booked in Q3 2005 was £80m ($149.4m), and that a deal with BT for London was likely to be for a slightly lower sum.