IT suppliers sense healthy profits in NHS

The National Health Service could provide first aid for IT businesses struggling against the economic downturn.

The NHS is committed to shifting services online by 2005, by which time it should have completed its Electronic Patient Records programme which will make electronic records available to patients, doctors and hospitals nationwide.

Fewer than a fifth of the UK's 245 hospital trusts have bought patient record systems. Most NHS procurement is at local level, and the adoption of technology is not co-ordinated.

But in the run-up to the election, Prime Minister Tony Blair said that the Government will use the private sector to provide more public sector services.

New technology and outsourcing is likely to be high on the agenda, as is a shift to standardised systems procured at a national level.

Pete Foster, an analyst at Ovum Holway, explained that services companies are eyeing the public sector and the NHS as a "safe haven". "Government doesn't suffer from the same fluctuations as the outside world. You notice that in outsourcing," he said.

The NHS has already announced that a consortium consisting of McKesson HBOC, Oracle, PricewaterhouseCoopers and IBM has been selected as a preferred supplier to test its new national human resources and payroll system as part of a 10-year deal.

The system, valued at about £300m, will replace a decentralised mix of payroll systems and will provide the NHS with its first integrated national package.

The NHS is negotiating with the consortium before testing and piloting the system. Big outsourcers such as EDS are seeing a potential market in the NHS if its procurement model is centralised.

"The structure of the healthcare industry in the UK has not been well suited to the sort of transaction that we do," EDS UK president Bill Thomas told Computing. "The sweet spot for EDS is very large transactions. The healthcare sector could develop to offer that opportunity."