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Review of market opportunities with the NHS in England
New business plan for NHS IT
After three years of activity, we now have a much clearer picture of the practical implications of the National Programme for IT (NPfIT). Publication of the latest business plan by Connecting for Health (CfH) has finally removed some of the wraps from this high profile Government driven project. The road to a full National Care Records Service (NCRS) turns out to be at least as long and winding as many experienced healthcare IT professionals had predicted. In reality, the original timescales of “two years and nine months” have stretched to a decade or more.
In addition to its many undoubted strategic and technical merits, NPfIT also has a strong political dimension. The original idea was first conceived in 2002, three years before the 2005 General Election, as a means of gaining strategic advantage and mitigating political risks commonly associated with high profile NHS IT projects. Now that the election is past and NPfIT has started to become a practical reality, current political priorities are rather different.
The next General Election will probably take place in 2009, with build-up starting in 2008. Even under currently projected timescales, NPfIT will still be deep in the transition phase, particularly in terms of rollout by NHS Trusts. The most likely areas for political gain will therefore be in national infrastructure and application projects, most of which are already well under way. These national projects are fully capable of completion within the next three years, at least in terms of available functionality, even if take-up may be less than 100% at local implementation level.
In addition to the £6billion committed by CfH (of which less than half has been spent to date), considerably more will be required to achieve successful completion. Emphasis has already switched to NHS Trusts to provide more IT resources and funding for themselves. This comes at a time when Trusts are under unprecedented pressure to balance their budgets and may find the choice between increasing IT spend and cutting back clinical services difficult to make. This will result in a softening of the hard edges of NPfIT and will allow more room for choice and diversity in local IT implementation projects.
However, some difficult questions still remain to be answered in relation to NPfIT and its implications for the UK market:
What exactly is the scope of new products being rolled out?
How will the transition from current systems be handled?
How will suppliers secure engagement with clinical users?
Where will necessary implementation resources come from?
Who will be winners and losers in the emerging market?
What now are the future prospects for NHS IT?
Scope
The National Programme consists of a number of centrally provided infrastructure and application projects, with key deliverables outlined in the CfH Business Plan. These projects are centrally funded and the contracts are let to large-scale supplier consortia. One of the most important of these projects from a strategic standpoint is the National Care Record Service (NCRS). NCRS is a major component of the new NHS IT infrastructure, currently out to consultation regarding its specific purpose, method of operation and governance provisions.
Four large scale Local Service Suppliers (LSPs) are tasked with rollout of a limited choice of NPfIT compliant replacement PAS products, together with integrated GP Systems, Order Communications, PACS and Electronic Prescribing to NHS Trusts in five large geographic clusters. Progress with the rollout of these local systems has been significantly slower than originally planned, and even the latest estimates of five years for full implementation across England now begin to look optimistic.
Electronic Prescribing (EP) is at the heart of most global initiatives for increased patient safety and was an essential goal of the 1998 NHS IT strategy for acute hospitals. However, ‘Electronic Prescribing’ is still not clearly defined within NPfIT. In practical terms, there are three different possible interpretations of EP, ranging from simple electronic transmission of GP prescriptions through GP prescribing to fully integrated electronic hospital prescribing. Exactly what is covered in the latter category is still open to conjecture.
For contractual purposes, the application content of systems for NHS Trusts is categorised into three groups as follows:
Core bundles - which are mandatory for LSP contracts
Additional bundles - which are optional for LSP contracts
Other applications currently outside scope of LSP contracts
So core and additional LSP bundles represent only one part of the full scope of systems needed to support modernised healthcare delivery. Notable areas not currently covered by NPfIT include:
Mobile computing, wireless devices and roving access
Radio Frequency ID, smart cards and biometrics
Near-patient testing, telecare and telemedicine
Advanced radiology – image analysis, pattern detection etc
Medical devices for remote monitoring and testing
Document management, scanning and speech recognition
Business applications – casemix, billing, costing, supply chain etc
Disease management, shared care and social services
With the Government promoting additional private sector services and a progressive shift from acute to community care, some of these applications outside the remit of the NPfIT look set for particularly rapid growth.
Transition
In practice, the precise extent of NPfIT applications on offer is not easy to define for individual NHS Trusts, each of which is starting from a different baseline and looking to progress at different rates towards different strategic objectives. Typical NHS Trusts consist of many different clinical departments with varying depths of IT support, but not normally integrated across the healthcare enterprise. The issues to be addressed here are often not just technical but rather more to do with evolving clinical processes and working practices.
For Strategic Health Authorities and PCTs – currently facing major organisational upheaval – the situation is even more confused. In practice, the only safe approach is for NHS organisations to concentrate efforts and resources on high priority business issues. Those applications most closely related to essential business processes are the ones most likely to attract scarce resources and funds.
For example, 75% of NHS patient records are still held on paper and the volume is growing at 15% per annum. So the paper mountain may double during the rollout period of NPfIT. In practice, fully electronic patient records are unlikely to be delivered inside 10 years, and many NHS Trusts will continue to work with mixed paper and electronic processes for the foreseeable future. As current clinical processes are predominantly paper based, NHS Trusts face a significant challenge in maintaining clinical process integrity during the transition phase.
As a result, realisation of the NPfIT is going to be much more dependent than had originally been expected on continuing support (and indeed updating) of current or legacy systems. This has already been recognised in the case of GP systems and a similar situation is evolving with hospital systems. Pending availability of full National Care Record Service capabilities, GPs and hospitals must either implement their own local Electronic Patient Record (EPR) systems or stay with paper records which will become increasingly difficult to support and be inadequate for the business needs of modern clinical practice.
Engagement
Clinical engagement has proved to be a major issue for NPfIT. From the outset, Connecting for Health never undertook to sell the concept to clinicians – and LSPs didn’t necessarily think they were required to do so. This has left a mammoth task for the Department of Health (DH) to bridge between CfH and an increasingly intransigent community of potential clinical users. Responsibility for clinical engagement has been delegated to a team of part time clinical champions, adopting improved patient safety as one of the prime justifications for NPfIT.
Within the last month, a comprehensive national communications programme has been launched by CfH, targeted to inform 1.2million NHS staff at all levels about NPfIT rollout.
The lead implementation role for CfH is now assigned on a full time basis, which does at last begin to recognise the true scope of this task. But never the less, most experienced suppliers of clinical systems always knew that early engagement with users is vital to long term success. The nature of clinical systems is such that users have to accept a much greater degree of responsibility for their effective (and safe) use than in other comparable service sectors. The significance of this has been rather slow to dawn on CfH and their political masters.
Now the big question for LSPs is the extent to which they, too, will be expected to step into this breach and actively carry the NPfIT sales message to NHS Trusts and clinical users. Some may have been under the impression that LSP contracts with NPfIT represented ‘bankable business’, but this turns out not to be the case. NHS Trusts, already strapped for cash, need more than a little convincing of the scale of financial responsibility they will need to accept in order to see NPfIT objectives through to successful conclusion.
Resources
The actual resources required to fully implement NPfIT are far in excess of original estimates, particularly in such areas as business process re-engineering and change management. The available UK resource pool includes several different potential sources:
LSP project staff
Staff working for LSP subcontractors
Staff associated with other non LSP specialists
Internal NHS staff
External consultants
Contract or agency staff
All of these resources have to be paid for, within a market where skilled healthcare IT and change management staff are at a premium. There is already some doubt about the ability of NHS Trusts themselves to provide the necessary skilled internal resources required to fulfil their obligations under LSP contracts.
LSPs do have access to large numbers of skilled IT and change management staff, but few of those at their disposal have in-depth experience of the health market. One of the unintended consequences of NPfIT has been to provoke an exodus of skilled staff from specialist healthcare IT companies whose future in the NHS has been threatened by the procurement process.
In practice, both LSPs and their NHS clients will continue to be heavily dependent on specialist support from existing system suppliers during the extended transition period to full NPfIT rollout. This resource pool was never large enough to meet current demands, and has been further depleted during the extended period of market stagnation which started with Information for Health in 1998 and has continued under NPfIT.
Winners and losers
Given all that has happened over the past three years, and what is now known about the practicalities of NPfIT, we can begin to see who are likely to be winners and losers in the NHS IT market. On the face of it, national system providers and LSPs are all candidates to be long term winners. But already one national contract has been summarily withdrawn and recently published financial statements indicate the extreme financial risks involved with other NPfIT contracts. It would take a brave person to bet against any further dropouts, either voluntary or enforced.
Three years ago, conventional wisdom said that the days of many established specialist healthcare suppliers were numbered. This threat turned out to have been overstated. It is certainly true that some of the weakest have already left the market – but some of the well established local players have become even stronger.
But the big surprise has been the ability of small specialist healthcare system suppliers to adapt and re-invent themselves for a new market environment. There have been a significant number of mergers and acquisitions, and several companies have successfully floated on the AIM market – with more candidates waiting in the wings. These specialist suppliers are playing an increasingly important role as subcontractors to LSPs, and many of the so called legacy or existing system suppliers are seeing a significant upturn in their levels of business.
Another group of suppliers gaining from NPfIT are major technology companies providing servers, desktops, commodity software, telecoms and medical devices. Although significantly larger hardware and software discounts are now on offer to NHS users through national agreements, the major technology suppliers have been able to shorten their supply chains and reduce their costs of sale into the NHS.
The net result is a significant diminution in numbers of supplier staff dealing directly with third party healthcare system builders and NHS end users, but much closer and more direct marketing links with the NHS at Government and national level. However, leading medical device and diagnostic companies are the exception to this rule. They are also forging much closer high level strategic links, but also maintaining and increasing their clinical level contacts in the NHS. These organisations can be expected to have an increasing impact on the future evolution of healthcare IT.
Finally, one group which has really benefited from NPfIT in hard financial terms is large management consultancies. For the first time, these organisations have been able to secure fee income in the NHS at levels comparable with other sectors. With the growing demand for scarce IT and change management skills in clinical process transformation, fee levels for consultancy in the NHS will continue to increase. This trend is already attracting the attention of major IT and healthcare consultancies from the USA, some of whom are already deploying subcontract resources into the UK for NPfIT.
Future prospects
In many respects the jury is still out regarding future prospects for CfH. The next few years will determine the extent to which NPfIT is judged as a technological flash in the pan, or whether the programme will make a lasting impression on NHS processes and the way care is delivered in England. Early expectations for NPfIT were set at an unrealistic level, partly for reasons of political expediency. Three years later, CfH has adjusted its objectives to be more realistic and achievable. Now the priority is to demonstrate real progress towards local implementation goals during the current parliamentary term.
The NHS IT market has been effectively de-stabilised for three years, with a combination of good and bad results. The full impact will only become apparent as the market returns once again to stability and long term changes can be properly assessed. Certainly the market is different from what it was before NPfIT, and the supply side already involves new players in addition to established names that have survived and prospered. After years of stagnation, NHS business is set to grow again – with opportunities at all levels of the supplier spectrum.
New technologies, smart medical devices and advanced clinical applications are still outside the original remit for NPfIT. As the Government moves to the next stage of radical NHS modernisation, new challenges such as foundation trusts, payment by results, integration with social services and support for private sector clinical services will offer major areas of business opportunity for innovative suppliers prepared to address the healthcare market with imagination and flair.
So the message for NHS IT users and suppliers is that normal IT service needs to be resumed as soon as possible – but working with a much improved central infrastructure and with stronger more professional supplier alliances. For LSPs and specialist healthcare IT companies, it is more vital than ever to reinforce market positioning with clinicians and other end users. Healthy and robust market dialogue is going to be essential to re-establish significant forward momentum for local NHS IT implementation.
First published by BJHC Limited, October 2005
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