South liable for greenfield penalties

The NHS will be liable to pay £44m to BT if it fails to deliver four ‘greenfield’ sites in the South of England ready and willing to take Cerner Millennium.

Assuming all goes well, the Department of Health will pay £73m to BT for installing Cerner Millennium at four Southern sites.

But should the trusts baulk at taking the software, the health service will be liable for penalty payments of up to, £44m – 60% of the total. The money would come out of the total allocation for NHS IT in the South.

The four trusts in question are understood to be Oxford Radcliffe, Royal Bath, North Bristol and one other.

The liabilities date not from the beginning of the National Programme for IT in the NHS but are set in a contract signed just three months ago, after well publicised problems with Cerner Millennium at Barts and the London and the Royal Free trusts in London.

In June, BT signed a new £546m contract to support the eight existing Cerner sites in the South, to implement Millennium at four more sites, and to install RiO in 25 community and mental health trusts. The deal was struck a year after Fujitsu was sacked as the local service provider for the cluster.

Trust board papers seen by E-Health Insider state: “If the trusts leaves the national programme, it will undermine the CCN [Change Control Notice] already signed for the greenfield sites, and incur penalty costs for the NHS.

"If the NHS in the South does not deliver the four greenfield sites, it is liable for 60% of the £73m.”

The papers from Oxford Radcliffe Hospitals NHS Trust say that while these costs are unlikely to fall to individual trusts, they would most likely “be deducted from the funding allocated to the South for the national programme."

The trust says that the NPfIT option is worth up to £30m to the trust, with funding of up to £25m in initial investment costs promised centrally, together with annual operational support costs of approximately £750,000 a year through to 2015.

As part of the post CCN deal with BT, the trust is also promised a Cerner domain shared only with the neighbouring Nuffield Orthopaedic Centre. Each of the four greenfield sites will now get their own domains.

Examining the alternative options available, Oxford Radcliffe says that ‘do nothing’ is not an option “given the age and functionality of OXPAS” – the PAS system currently in use, which is more than 20 years old.

The trust says that OXPAS is obsolete and “cannot support Choose and Book, 18-week waits, or the wider demands of clinical activity and first-class patient care."

On procurement through ASCC, it says: “This would be funded under the national programme, but would provide no additional control over functionality and cost.”

The trust estimates that following the ASCC route would also lead to additional delays of a year or more, as well as running the risk of the NHS incurring penalty costs.

“This option would also increase the internal CRS team costs (which are met by the trust) by at least £1.5-£2m for the extended programme and additional contract management support," it adds.

The final option examined, and quickly rejected, is withdrawal from the national programme.

“The trust could undertake its procurement, but in doing so would incur delays of at least a further year, as well as capital costs of approximately £25m, and service charges of approximately £750,000, that the trust would have to meet from year one…”

Even so, the board papers say that repeated delays have sapped confidence among clinicians. “There is a high level of clinical support and enthusiasm for CRS, although the number of false starts has generated scepticism that a scheme will be delivered.”

Oxford Radcliffe had been part of a Thames Valley-wide collaborative procurement, which had selected Cerner as a preferred supplier back in 2003. The collaborative procurement , which first completed a business case in 2000, was halted at the advent of the NHS IT programme in 2003.

Reasons given for halting the collaborative procurement at the time were that it would be more expensive than the national IT procurement and not be able to deliver as quickly.