At a time when many organisations are moving to outsourcing and facilities management, Wellington’s Capital Coast Health has turned 180 degrees and cancelled its five-year contract with EDS because of cost.
This follows a November review of pricing under a clause in the contract, which had been operative for around three years.
“Under the current operational budgets we can’t afford EDS,” says Warwick Wright, Capital Coast Health chief information officer. “It’s been mutually agreed with EDS to go back to in-house support. Given the nature of our business, it was difficult to get leverage for EDS.”
EDS had been managing infrastructure services, including the desktop, helpdesk, midrange computers and networks.
Wright says the transition back to in-house support will take three to four months and that some staff may come across from EDS.
EDS says in a statement that the quality of its service delivery has met Capital Coast Health’s expectations — confirmed by Wright —and that the IS infrastructure has developed significantly during the relationship. “The decision to take the services in-house is because of funding restraints at CCH.”
It’s all a far cry from 1995 when EDS was trumpeting its success at CCH with a shared risk/reward model which it called co-sourcing. EDS announced that it had formed a health team and would offer its services on a shared risk/reward basis.
“EDS will assist in implementing the [IT] strategy and will take over responsibility for the company’s current and future operations,” CCH said at the time, indicating it would invest $22 million in enhancing its IT over three years.
A little over a year later, CCH was in deep financial trouble with projected budget blowouts across the organisation growing by the millions of dollars seemingly every week.
In 1997 under new ceo Leo Mercer, US health software provider SMS was contracted to provide modules of its Allegra system — that’s where the $22 million was to be spent — and EDS’s involvement was scaled back to outsourcing and facilities managing existing equipment. Mercer had experience with SMS at his previous job in the US.
Wright says the bulk of the SMS implementations will be complete by the end of this year.
So far, patient registration and accounting, clinic scheduling, electronic medical records, radiology and online orders modules have gone live.
Still to come is the major pharmacy application, while there are some optional products.
“We also have to extend coverage of some of the systems because not all of the hospital is online,” Wright says.
The decision to take services in-house is the second blow for EDS is recent months.
Late last year, Social Welfare scaled back dramatically the redevelopment of its SWIFTT project by EDS. SWIFTT now seems to have gone almost into hibernation with the establishment of Work and Income New Zealand, which takes over many of the social payments handled by Social Welfare.