Will the national programme pay for contestability?

Senior industry sources have confirmed to E-Health Insider this week the rumour, which has been circulating in EHI’s online forums, that iSOFT has submitted an extremely competitive offer to the National Programme for IT (NPfIT) to become the single provider of electronic clinical information systems (ECIS) for the entire English NHS.

If these industry sources are accurate, it potentially raises a number of interesting scenarios.  Should the PlexusCare consortium – led by EDS and LogicaCMG bidding iSOFT – win the South, every LSP except London, where BT is offering IDX, would be then be committed to iSOFT. 

In this scenario IDX’s position in London might in the medium-term begin to look anomalous and potentially even vulnerable.  Why go with one clinical application provider in all but one of the NHS clusters?

It is perhaps partly to prevent such a potential scenario occuring that BT has recently thrown its weight behind the Fujitsu/IDX bid for the South.  EHI understands that the Southern Fujitsu/IDX bid is now based on sharing a common architecture with BT/IDX in London.

What needs to be remembered is that NHS IT director-general Richard Granger is under intense pressure from the Treasury to reduce the cost of contracts.  The option of a single England-wide ECIS systems provider, common to all five LSPs, may be seen to offer one way to deliver major savings through  economies of scale.   

But while a single system maybe the cheapest option it would add to the already high level of risk associated with the NPfIT.  In the original procurement strategy for the NPfIT a central theme was to ensure ‘market contestability’ at every level of the programme, from LSPs through to second and third tier suppliers. 

This entails ensuring LSP contracts awarded across England cover more than one main clinical system suppliers, so that any firms which fail to deliver can have contracts removed and transferred to those who had proved they can.

Crucially, the option of going with a single supplier, and placing them in a de facto monopoly position, appeared to be explicitly ruled out at the outset of the programme.  The reasons given were the high levels of additional risk involved and the fact that no one supplier was judged to have sufficient capacity to deliver on the scale required.

The question then is whether cost will subsume all other considerations in the decision on the LSP for the South?  The picture is by no means clear.  There are certainly indications that in the case of the North West and West Midlands LSP decision, like the earlier decision on e-booking, the contract was not simply awarded to the lowest bidder.

The latest rumours are that all three Southern LSP bids are fairly close on price, with the NPfIT seeking to sign the last LSP deal for less than a billion pounds.  If this information is accurate it suggests that the national programme’s decision may well be based on what it believes to be the optimum level of contestability among ECIS suppliers.

Should the contract go to Fujitsu/IDX we would continue to involve two clearly differentiated clinical systems within the national programme.  If it goes to Sema/Cerner the number rises to three. Does the national programme believe that it needs more than one main ECIS application outside London, or is ISOFT and a spare enough? 

If Plexus Care succeeds in the South, it would indicate that the national programme has decided that it can afford to sacrifice a large degree of contestability for the future.  The imminent decision on the South looks set to answer the question of what premium, if any, the NPfIT places on contestability.