The Department of Health has finalised its new agreement with IT services provider CSC, meaning that NHS Trusts in the North, Midlands and East of England are no longer obliged to use its Lorenzo electronic care records system.
"Under the new agreement, CSC’s exclusive rights to be the only provider of clinical IT systems in the North, Midlands and East of England have been removed," the Department said in a statement today.
The government says that renegotiating the contract will save the NHS £1 billion. "The money saved will go back into the NHS and would be enough to pay for half a million extra knee and hip operations, and almost 15,000 extra doctors."
However, this does not take account of the fact that if they wish to adopt or upgrade their patient care records systems, NHS Trusts will now be using their own budgets.
This finalised agreement has been on the cards since the Department of Health and CSC signed a Letter of Intent in March. Since then, CSC has been awaiting final confirmation of the new agreement.
CSC CEO Mike Lawrie tried to put a positive spin on today's news, pointing out that NHS Trusts may still choose to use the Lorenzo system. "Under this agreement CSC will continue to have the opportunity to support the NHS Information and Communications Technology infrastructure through deployment of our groundbreaking Lorenzo base product solutions, now rigorously tested and approved for wide-scale deployment across NHS," he said.
In truth, having invested $1.5 billion in the project, CSC is in no better position than any other potential supplier – in fact, the negative publicity surrounding its involvement with the NHS may well have put it at a disadvantage.
In May, having written down its $1.5 billion investment in the NHS deal, CSC announced a $1 billion cost cutting drive that included job cuts to its Lorenzo team in the UK.
The contract with CSC dates back to 2003 when, under the now-defunct National Programme for IT, the government awarded three contracts to supply patient care records systems to the whole of England. CSC won the largest contract, covering the North, Midlands and East of England.
In 2008, the National Audit Office found that "the development of Lorenzo has taken much longer than originally planned, with the delays attributed in part to an underestimation by all parties of the scale and complexity involved in building a new system from scratch".
The NAO also identifited the financial difficulties of iSOFT, the company that originally developed Lorenzo, as a complicating factor on the deal. CSC acquired iSOFT last year, in a move seen by some as an attempt to prevent iSOFT bankruptcy fom underming its NHS contracts.
To date, 13 NHS Trusts have either implemented Lorenzo or have initiated an implementation. There are 228 Trusts in the region covered in CSC's contract.
A filing from CSC to the US Securities and Exchange Commission reveals that the company will receive a £68 million break fee from the government.