Deloitte report details national health Oracle debacle

Health Minister Dr David Clark says the Deloitte report is a window into a troubled project

The Health Ministry has released a report from Deloitte, commissioned in 2017, into the long running $90m Oracle-based National Health Solution along with a review into the Deloitte review commissioned from Audit NZ, saying it intends to fully implement the recommendations of the Audit NZ review.

The National Oracle Solution is a financial management and procurement system based on Oracle business applications that is intended to replace all district health board’s current finance and procurement systems.

Health Minister Dr David Clark said the Deloitte report had been a window into a troubled project. “When we took office we were deeply concerned about the waste of taxpayer dollars between 2012 and 2017 when $90 million was spent with little to show for it,” he said.

“The whole point of the [Deloitte] review was to salvage a project that was going off the rails. Deloitte’s report makes clear that the project was not set up to deliver its expected benefits for DHBs. This underlines that there was an urgent need for the Ministry to intervene when it did.”

In August 2017, NZHP sought approval from the DHBs for the revised timeline and an additional $22.84 million (including contingency) to complete the programme.

In late 2017 the Ministry commissioned Deloitte to review the National Oracle Solution programme to inform its advice to the Government. And in April 2018 it asked Audit New Zealand to undertake a review of the process by which it had engaged Deloitte to review the National Oracle Solution programme:

Deloitte found that the $22.4m would not cover DHB implementation and change management costs, Pharmacy change costs, ongoing support and maintenance or future rollout waves.

“The funding request therefore presents only a partial picture of the total funding commitment required,” it said.

Also, Deloitte said: “The programme has developed updated estimates of the operating costs associated with the solution ($50.29 million to FY 21/22) but is using estimates from the original business case for DHB implementation costs  ($27.85 million to FY 21/22).

“These estimates do not include capital replacement costs, any associated DHB investments, activity to actually realise benefits or implementing any recommendations from this review.”

It concluded: “Based on the experiences of other healthcare jurisdictions substantial additional investment would be required.”

Audit NZ found that the Ministry followed the Government’s procurement procedures when it commissioned the Deloitte review but did not do enough to manage perceptions of conflict of interest.

“I’m advised the Ministry has accepted Audit New Zealand’s findings and has acted to address them”, Clark said.  He made no comment on whether Deloitte’s recommendations would be implemented.

The Audit NZ review found that the Ministry needed to:

- significantly improve its awareness of probity and conflict of interest in procurement processes;

- improve its awareness of the risk of perceived conflicts of interest;

- seek disclosures of interest from consultants for all significant procurements and in particular for all engagements through a CSO;

- document its processes and decisions more thoroughly;

-  amend its procurement polices to recognise the existence of the AOG [all of government] contracts and the particular processes attached to them.

Implementations to date

Pete Chandler - Acting CE of the Bay of Plenty District Health Board, said in his August 2018 newsletter: “The last month has been an extremely challenging one for many of you working with the new NOS. … Ours is one of four DHBs (the others being Canterbury, Waikato and West Coast) in the first wave to transition to the system and it went live here at the start of July.”

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More about Audit New ZealandBay of Plenty District Health BoardCanterburyChandlerCSODeloitteOracleWest

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