NHS IT: Patient records deal faces £764m cutback
Patient records programme could shrink to £2.1bn...
CSC's contract to deploy care records systems to the NHS could be reduced by more than £750mPhoto: Shutterstock
A project to provide electronic records to NHS patients in England could be scaled back by more than £750m, it emerged on Wednesday.
The Lorenzo electronic patient records system is being deployed in health trusts in the Midlands and the north and east of England under a £2.9bn contract between supplier CSC and the Department of Health (DoH).
Yesterday CSC revealed the value of the contract could be reduced by £764m, to about £2.1bn, under an amendment being discussed with the DoH. The figure was disclosed in a filing to the US Securities and Exchange Commission.
The DoH and CSC have been negotiating reductions to the contract since last year, and the DoH has previously stated that it expected the contract would be reduced by £500m.
CSC has missed targets, known as milestones, for the rollout of the Lorenzo patient records system to health trusts in England and the project is running years behind schedule. The scheme suffered a major setback in April when one of four trusts chosen to be an early adopter of the care records system pulled out of the project.
In its SEC filing, CSC said: "As a result of the expected contract amendment, the company estimates the total contract value will be reduced by £764m," adding that it expects the amendment will also extend the length of the contract by one year to June 2017.
"The company estimates that revenue of £1.5bn to £2bn over that remaining term [to 2017]," the filing said, adding that it expects the contract to remain profitable.
The filing suggests that, under the amended contract, CSC would roll out the patient records system in...
...fewer health trusts than originally intended, forecasting "a reduced number of contractually required deployments under the expected contract amendment".
However, the SEC filing also highlights that there is still a possibility CSC and DoH may not agree amended terms for the contract.
Termination questions
When CSC failed to meet a deadline for the rollout of the Lorenzo system at an early adopter health trust earlier this year, the DoH said it was considering terminating its contract with CSC.
Yesterday's SEC filing said that while the DoH considered CSC's failure to hit the deadline to be a breach of contract, CSC had disputed that it constituted a breach.
The filing goes on to spell out the financial consequences if the DoH were to choose to "terminate the contract for convenience" - that is, where the contract is terminated for a reason other than a breach.
"In which case NHS would owe significant termination fees to the company, and the company would have claims against NHS for compensation due to delays and excess costs caused by NHS or for contractual deployment delay remedies," the filing said.
The DoH would incur further costs, the filing added, from having to tender for new IT suppliers and the cost of transitioning existing services from CSC to those new suppliers.
Last month, DoH CIO Christine Connelly told the parliamentary spending watchdog, the Public Accounts Committee, that scrapping the contract with CSC could cost the DoH more than seeing it through to completion.