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Off-the-shelf software and NPfIT fuel growth

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New Kable research shows that national initiatives will underpin a steady growth in ICT spending by healthcare organisations around the UK.

Spending on off-the-shelf software and large outsourcing contracts is expected to fuel an increase of three to four per cent per year in the UK market for ICT in public sector healthcare up to 2011, research suggests.

The UK public healthcare market profile to 2010/11 forecasts that total spending will rise from £2.25bn in 2006/07 to £2.52bn in 2009/10. This will be closely related to the delivery of the NHS National Programme for IT (NPfIT) in England, which is leading local health organisations to prioritise the development of electronic health services, such as patient records and appointments systems.

The trend towards integration, which underlies the NPfIT, has discouraged healthcare trusts from developing software in-house and instead to look for turnkey solutions. This is fuelling a growth in spending on off-the-shelf software, forecast to rise from £137m in 2006/07 to £201m in 2010/11.

While the NPfIT accounts for just below half of ICT investment in England's NHS – with the proportion expected to increase by 2010 – spending outside the programme remains important. One of the main trends in this sector is a strong growth in full outsourcing contracts, rising from £531m in the past financial year to £830m in 2010/11.

The research shows that, while there have been serious delays in some areas of the NPfIT, most organisations believe that it will be delivered. Some 69 per cent of those questioned by Kable said it was completely or mostly feasible, and do not regard the amalgamation of systems as a major problem. Kable expects that the NPfIT will ultimately deliver, although it will probably narrow its scope and, due to delays with the Summary Care Record and a restructuring of the framework, will not meet its 2014 deadline.

While the need to modernise systems and provide savings is likely to increase spending on software and outsourcing, falling prices are expected to reduce expenditure on hardware and mobile devices.

The NPfIT is one of the largest civil ICT initiatives in the world, with total costs estimated by the National Audit Office at £12.4bn. It is being delivered by three local service providers (LSPs) – CSC, BT, and Fujitsu – under 10 year contracts, as well as a large number of subcontractors, but the National Local Ownership Programme has led to some budgeting and purchasing decisions moving away from the central agency, Connecting for Health, to the 10 strategic health authorities (SHAs).

This will open doors to new suppliers, especially smaller, innovative companies. At present, there are nearly 80 companies involved in the delivery of NPfIT, all of which have been selected and managed by the three LSPs. The competitive landscape will gradually become more regionalised and dynamic, in line with the specific needs and requirements of each cluster. The LSPs will have to understand and work closely with each SHA in order to select the most suitable service suppliers for each of the 10 regions.

National initiatives in the UK countries are also contributing to the trend. In Wales, the procurement process has begun for the £88m Informing Healthcare programme, while in Northern Ireland the Department of Health, Social Service and Public Safety launched a strategy in 2005, which involves spending £95m up to 2015 on integrating information across health and social care. Scotland is taking an incremental approach to developing e-health services, but they are underpinned by a £300m deal between NHS National Services Scotland and Atos Origin Alliance for the delivery of its principal IT services.

As part of its research, Kable conducted 142 interviews with representatives of health organisations across the UK, and obtained insights from key players in the public healthcare ICT supplier community. This gives the report a unique ground-up level of information and analysis.

This article was originally published at Kablenet.

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