Cash-strapped Capital Coast Health is facing higher costs and a longer rollout period for its $22 million information technology project.
In a letter to staff, chief executive Jim Harrison says the financial outlook is of concern and deeply disappointing. The crown health enterprise’s board has advised the Minister for CHEs, Bill English, that its planned deficit for the year ending June 1997 is expected to be between $31 million and $44 million.
In its 1995-96 statement of intent to Parliament, Capital Coast Health projected a deficit of $13.3 million for the 1996-97 year.
In his letter, Harrison says: “It remains essential for us to redevelop our sites, enhance our clinical technology, invest in information technology and to deliver the customer-focused process improvements Project Quantum is identifying.”
Referring to the budget blowout, he says initial analysis has identified three key elements, including “... that the total benefits from site redevelopment, enhanced clinical technology and better information technology remain as large as we had expected ... but that those benefits will be more expensive to get and will take longer than we had previously thought”.
Back in April, Capital Coast Health said it expected its new IT systems would begin delivering benefits in the 1996-97 financial year, beginning in July.
It had just formalised a contract with EDS, confirming the vendor as its supplier of computer services and entering into a business partnership which EDS terms co-sourcing.
Under the agreement, EDS was to manage the investment of the IT budget, outsource existing IT operations and infrastructure, and also manage third-party suppliers of software and hardware.
It is a shared-risk model, which was to get the CHE its new IT systems at probably a lower price than it might have paid elsewhere, with EDS claiming back a percentage of benefits gained through its management skills.
At the time, Capital Coast Health finance and information services general manager Peter Murray said there would be an 18-month rollout period for the first major deliverables, focused on patient records. Other deliverables would be rolled out over an additional 12 months.
In all, 53 projects had been identified, grouped into eight major projects.
The IT component was part of a $90 million investment programme--the CHE has already borrowed the money--which includes redeveloping buildings and other facilities and services.
However, it’s well past the beginning of the new financial year and, to date, no final investment decisions in IT have been made.
When Computerworld questioned Murray on the project, he responded in writing: “The risk-reward relationship foreshadowed when our partnership with EDS was announced would apply from the time final investment decisions are made.
“We have now finished the phase of identifying and analysing our IT options but no final investment decisions have been made. Thus the risk-reward arrangements do not yet apply.”
Minister English says it has been made clear to Capital Coast Health that approval of its remedial strategy--yet to be announced--will rest with the incoming government. Thus it seems unlikely that much progress, if any, is going to be made on the IT project till the politicians sort out their coalition plans.