In the second of her series of articles marking the 60th birthday of the NHS, healthcare expert Alexandra Wyke looks at the implications of new government procurement guidelines for businesses bidding for NHS contracts

When it was unveiled in June 2002, the national programme to modernise NHS computer systems looked set to be the world's largest public sector IT scheme. By 2013-2014, something like £12.4bn of public money will have been spent "digitising" medical records and wiring up the NHS. Such a huge price tag meant that the processes by which Connecting for Health, the government agency in charge of the programme, procured goods and services from the private sector would be scrutinised from the outset.

In February 2003, the Department of Health (DoH) revised and centralised its procurement guidelines to ensure "value for money", "consistent development" and "interoperability". Private suppliers were also required to share risk. To some extent, the new procurement rules have seemed the one bright spot in the plan's troubled history. While public spending watchdog the National Audit Office has raised much publicised concerns about delays and lack of consultation with clinicians, it has generally seen procurement as a job well done. Its June 2007 report, The National Programme for IT in the NHS, concluded that: "The speed of the negotiations, and the inclusion of a sound balance of incentives and penalties within the contracts, have put NHS Connecting for Health in a strong position in its relationships with suppliers—one that is stronger than previous government procurement practice."

But from the perspective of many of the suppliers the whole procurement process has been nothing short of disastrous. In February 2006, the DoH decided to suspend the NHS's use of a picture archiving service (PACS) created by Woking-based ComMedica (a spin-off from Imperial College). Ostensibly, the firm fell short of meeting its deadlines. ComMedica was consequently forced to close its diagnostic imaging business and lay off much of its workforce. At the time, the company's CEO, Mark Simon, told a local newspaper: "We went into Christmas 2005 confident that we were just weeks from going live. But, half way through January 2006, we were, in effect, kicked out of the hospitals, and the work stopped. We have still not been told why."

In June 2006, management consultancy group Accenture, which held two of the NHS IT programme's five awarded contracts, withdrew from the project after the company reported a significant drop in profits resulting from its involvement in the scheme. In October 2007, another programme participant, iSoft, was taken over by Australian firm IBA Health. In 2006, iSoft was hit by financial difficulties after delays in delivering its key software to the NHS IT programme.

The sight of companies struggling to work with the NHS makes many enterprises reluctant to follow in their footsteps. Those familiar with the DoH procurement processes are privately wary (at least in conversations with Director) of spending inordinate amounts of time getting to know convoluted NHS networks. They baulk at employing the large numbers of personnel (many on overtime) that are needed to fulfil the DoH's tight time schedules. And while the Department maintains that contracts are not always decided solely on price, applicants cannot avoid noticing that those coming in cheapest usually win—a state of affairs that inevitably plays into the hands of big businesses able to benefit from economies of scale. A general lack of transparency in the civil service, allied to the insistence that companies that do not attain DoH milestones should shoulder the cost of their failure, has some CEOs carping "never again".

So, should small and medium-sized companies contemplate a contractual relationship with the NHS? Josh Arnold-Forster, senior policy adviser at corporate communications agency Hanover, and former special adviser to John Reid (secretary of state for health, 2003-2005), has witnessed the procurement process from both sides. "So many elements of procurement processes are utterly routine and appear to add no value. These will be hugely demanding for small companies. But commissioners need to know that companies are capable of delivering on basic processes. It is critically important for civil servants to be seen to observe the requisite processes, demonstrating clear justifications for their purchasing decisions," he says.
Clear business principles—and the ability to communicate them—are seen as increasingly vital for suppliers. Arnold-Forster adds: "Outside this official process, key decision-makers need to know you and your competencies. They should already know what you stand for and why you will be able to deliver".

Sally Crowe of Crowe Associates, a small consultancy working for the public sector (including the NHS), has some tips for candidate contractors. She believes that because the government bidding process varies considerably (ranging from online anonymous submissions to chance conversations at meetings), companies need to be flexible and quick in responding to any opportunities that do arise.

Crowe also warns that the December 2006 report by the Comptroller and Auditor General (the head of the NAO), Central Government Use of Consultants, has meant the government is increasingly wary of—and even cynical about—consultancy.

The document stipulated that government departments "need to think ahead about what skills they should have, so that they do not have to rely on consultants, year after year. Departments should examine whether they really need to use consultants quite as much as they do—a move that could release substantial sums for frontline services".

According to Crowe, it's more important than ever before for would-be consultants to the NHS to be clear about what services they can provide, where they add value, and how they meet procurement requirements.
But the advantage isn't necessarily all on the contractor's side; transparency is increasingly a two-way street. "A new EU directive will give rejected bidders more time to examine a decision and choose whether or not to initiate a review procedure," says David Stern, a partner in the UK office of management consultants Roland Berger. "While there is a danger that this will add complexity and time delays to tenders, it will bring transparency and fairness to the awarding of public contracts."

The increasing demands on the health service are likely to mean that the DoH will place increasing reliance on the private sector. Those businesses that do pursue the opportunities on offer can, it seems, at least be assured of a fairer race.

The grand plan

The NHS national IT programme is designed to improve both the efficiency and effectiveness of the health service and allow patients greater choice and more control over their own care. But what exactly is it and what is it meant to deliver for the tax-payer? There are three key elements.

Choose and book
An online booking service that will enable patients to book hospital appointments at a place, date and time of their convenience directly from their GP's surgery and hence speed up the referral and treatment process. The programme aims to link more than 30,000 GPs to nearly 300 hospitals by 2014.

NHS care records service (NHS CRS)
An electronic database of medical records that will allow NHS staff across the country quick and easy access to information whenever (and wherever) someone is treated. This part of the plan has raised concerns about patient confidentiality.

E-prescriptions
An electronic system allowing patients to pick up repeat prescriptions from any pharmacy in the country; no more running out of medicine when you're away from home.

Alexandra Wyke, a former business and science correspondent for the Economist, is the founder of PatientView, an independent research and publishing organisation working closely with patients and health and social campaigning groups worldwide. Her book 21st Century Miracle Medicine was published by Plenum in 1997.