Supplier Problems - iSOFT
From Nhs It Info
Isoft issues FY profit warning after delays in NHS contract (28 Apr 2006)
Forbes
http://www.forbes.com/markets/feeds/afx/2006/04/28/afx2706539.html
"Healthcare software supplier iSOFT Group plc said full year results would fall short of expectations after problems with a key contract with the UK's National Health Service. ISoft said it had 'experienced difficulty in delivering a trading result in line with the current market estimates' following a severe profit warning in January linked to delays on the 6.2 bln stg refit of the NHS's computer systems."
iSoft restates accounts and axes 150 jobs (8 Jun 2006)
E-Health Insider
http://www.e-health-insider.com/news/item.cfm?ID=1932
"Healthcare software company iSoft has seen its shares tumble to a new low, on the back of an announcement this morning that it expects full-year revenue and profit to be significantly lower than expected due to a change in accounting policy. . . The Manchester-based firm also announced that it will make 150 of its UK staff redundant by the end of the year as part of a cost cutting-drive to slash operating costs by £25m. A 90 day staff consultation began on May 15. The company says it will also look at disposing other assets. iSoft has contracts to deliver clinical software in three of the five clusters of the NHS National Programme for IT (NPfIT). Currently providing versions of legacy products the company is developing a next-generation Lorenzo product. E-Health Insider understands that Lorenzo, originally due to be available for NHS implementation in 2004-2005, is now not expected to be available for significant numbers of NHS deployments until 2008-2009."
Accenture may drop iSoft from NHS work (1 Jul 2006)
The Independent
http://news.independent.co.uk/business/news/article1152068.ece
"The management of the troubled UK software developer iSoft came under further pressure yesterday after Accenture, a key contractor of its software for the £12bn upgrade to the National Health Service's IT infrastructure, suggested it might be prepared to use another supplier on the project. John Weston, the chairman and interim chief executive of iSoft, is already grappling with a renegotiation of the company's banking arrangements as well as a rejig of the NHS contracts. Over the past six months, iSoft has lost about 80 per cent of its market value after several profits warnings and restating its previous accounts to reflect a change in its accounting policy. As if Mr Weston did not have enough on his plate, Accenture has cast doubt over iSoft's future involvement in the NHS upgrade. Bill Green, Accenture's chief executive, told analysts on a conference call after its third-quarter results: "We are watching the iSoft situation closely ... we have a series of alternatives that we can take forward." The loss of the two Accenture contracts could result in a loss of about £200m in revenue for iSoft. ISoft reported revenue of £262m in 2005."
Uncertainty hits Isoft shares (1 Jul 2006)
Financial Times
http://www.ft.com/cms/s/7a3c648e-089e-11db-b9b2-0000779e2340.html
"Added uncertainty over Isoft's involvement in a large project to overhaul the National Health Service IT network sent shares in the troubled software group down by more 5 per cent yesterday. The fall followed comments by Bill Green, chief executive of Accenture, Isoft's partner in two NHS contracts. He said Accenture "was watching the Isoft situation closely" and had a "series of alternatives" that it was "prepared to go with . . . if that became necessary". This intensified speculation that Isoft could be replaced by Cerner, its US rival."
iSoft in crisis over £6bn NHS project (7 Jul 2006)
The Guardian
http://business.guardian.co.uk/story/0,,1815307,00.html
"The future of iSoft, one of the key software suppliers in the government's £6.2bn upgrade of NHS IT systems, was thrown into doubt today as the company delayed publishing its annual results because it was still locked in crucial financing talks with its banks."
iSoft delays results as it looks to banks for help (8 Jul 2006)
Guardian
http://politics.guardian.co.uk/publicservices/story/0,,1815847,00.html
"The future of iSoft, one of the key software suppliers in the government's £6.2bn upgrade of NHS IT systems, was thrown into doubt yesterday as the company delayed publishing annual results because it was locked in crucial financing talks with its banks."
Isoft faces formal probe (8 Aug 2006)
Financial Times
http://www.ft.com/cms/s/2dc96048-2716-11db-80ba-0000779e2340.html
“Isoft faces the prospect of a formal investigation after a preliminary examination of its past accounts found evidence of irregularities. The struggling healthcare software group, which provides software for the government’s £6.2bn National Programme for Information Technology, told the stock exchange Tuesday that the initial investigation launched two weeks ago by Deloitte, its new auditor, had concluded that there were grounds for a further probe. Richard Bacon, the Conservative MP for South Norfolk and member of the public accounts committee, said he would ask the secretary of state for trade and industry to consider whether there should be an investigation of the conduct of Isoft’s directors under the Companies Acts.”
ISoft suspends founder over accounts queries (9 Aug 2006)
The Guardian
http://business.guardian.co.uk/story/0,,1840040,00.html
“ISoft, the troubled NHS software supplier, has suspended two employees, including one of the group's founders, Steve Graham, after an investigation by its auditors confirmed accounting irregularities over two years. The latest revelations at the software group prompted calls from MPs for a government investigation into the company's directors. In its statement to the stock exchange, iSoft also pointed the finger at "other employees" who had since left the company. It refused to name them, but said they "appear to be involved" and that a further investigation would be required.”
NHS gave iSoft money upfront during year of irregularities (10 Aug 2006)
The Guardian
http://business.guardian.co.uk/story/0,,1840840,00.html
“The NHS has admitted it made an upfront payment to healthcare software provider iSoft in the last days of its 2005 financial year. The firm's auditors found this week that revenues that year were recognised earlier than they should have been. An iSoft spokesman said the payment in April 2005 had related to future revenues from maintenance contract extensions on legacy computer systems. These are still in use as doctors and hospital staff await the next generation of software - the £6.2bn national programme for IT. Tory MP Richard Bacon, a Commons public accounts committee member, last night said: "This is clear evidence that Connecting for Health [the NHS body implementing IT systems] has been making upfront payments to a company during a critical financial period where there are clearly now questions of accounting irregularities. It is plain the Department of Trade must investigate this." . . . Connecting for Health agreed to upfront payments to cover predicted maintenance revenues from legacy systems in 1,500 NHS trusts and practices. It said it received a discount for paying ahead. Such deals are not unusual for the NHS. ISoft directors' bonuses, set by a remuneration committee chaired until last year by former CBI boss Sir Digby Jones, were closely tied to revenues and profits.”
Sheffield abandons iSoft iPM implementation (16 Aug 2006)
e-Health Insider
http://www.e-health-insider.com/news/item.cfm?ID=2073
“Sheffield Teaching Hospitals NHS Foundation Trust has abandoned plans to implement a new patient administration system from iSoft, the stage of the local Care Records Service (CRS) software being offered to it under the NHS Connecting for Health programme. After delays stretching back to 2004, the independent foundation trust covering one of the eight largest cities in England outside London will now instead seek an “alternative solution” for use across the trust. This may be a non-CfH system. The Sheffield’s board finally decided to call a halt to the implementation of iSoft iPM on 9 August. In a statement the trust told E-Health Insider the decision was reached because: “A number of requirements were not met before the go live date of June 2006. These requirements were agreed by senior representatives of the trust, the LSP and CfH.” The trust had originally been due to receive the basic Phase 1 Release 1 (P1R1) of CRS back in November 2004, but the date has repeatedly been put back, and the project stopped and started, due to delays in completing the software. EHI has learned that the decision to abandon implementing iPM was taken after Sheffield made site visits to both Scarborough Hospital and University Hospital Birmingham to see their CfH implementations of iPM. The trust, however, denied these visits had specifically triggered the decision: “The site visits did not have any material impact on the decision made by the trust but they informed our formation of the pre ‘go-live’ requirements.” To date Accenture, the local service provider (LSP) for the North-east region, has implemented the CfH version of iPM at just one hospital trust – Scarborough and North East Yorkshire NHS Trust, which has proved problematic.”
Company at heart of NHS reform in serious trouble (23 Aug 2006)
The Guardian
http://business.guardian.co.uk/story/0,,1856154,00.html (Front page lead) http://business.guardian.co.uk/story/0,,1856163,00.html (Main story - business section) http://business.guardian.co.uk/story/0,,1856162,00.html (Timeline)
"The full extent of the financial difficulties facing the company at the heart of the NHS's £6.2bn computer upgrade will be revealed later this week. The troubled software company iSoft must release twice-delayed financial results to the stock market by Friday or trading in its shares will be suspended. The company's results are expected to show a dramatic downward reassessment of its profitability. A series of highly unusual accounting practices appears to be behind much of the company's initial financial success. . . . One of the final payments received for the year to April 30 2005 was an up-front sum from the NHS's IT procurement arm Connecting for Health. This month the Guardian reported that the payment related to future revenues from maintenance contract extensions on legacy computer systems which are still in use as doctors and hospital staff wait for iSoft's next generation software package, called Lorenzo. The legacy software contract extensions came with software upgrade licences that allowed iSoft to recognise at least part of the NHS money in its 2005 accounts. ISoft said this was in line with accounting policies at the time. It is believed that, at one stage, a similar last minute, up-front payment from the NHS had been anticipated for the year to April 2006. That payment was not made. Meanwhile concern is mounting about iSoft's Lorenzo software, a centrepiece of the NHS's £6.2bn nationwide software upgrade, being developed at the firm's base in Chennai in India. Consultancy firms Accenture and CSC, iSoft's partners on three big NHS contracts, produced a review of the software in February which found, aside from a basic version of Lorenzo tailored for GPs, there were 'no believable plans for releases'. The review said iSoft's release date targets 'must be viewed as 'indicative' at best and are likely to be highly optimistic'. The software is at the heart of iSoft's plans for the future and was described in its annual report last year as being already 'on the market' and 'available' from early 2004. ISoft expects to give an update on Lorenzo progress when it reports its figures later this week. Last month it signalled that it expected to take a 'material' goodwill impairment charge."
Government’s experts urge “caution” over beleaguered Mater Dei bidder (24 Aug 2006)
Malta Today
http://www.maltatoday.com.mt/2006/08/06/top_story.html
“The British firm short-listed to provide Mater Dei’s IT system, iSoft, has had its ratings revised downwards by industry experts Gartner, the same consultants government chose to assist the committees evaluating the offers from tenderers. . . .Mater Dei’s crucial IT system has to be in place by December 2006 if Prime Minister Lawrence Gonzi wants to cut the inauguration ribbon on 1 July, 2007, his fifty-fourth birthday. The decision on the crucial contract is now expected to be taken shortly after iSoft and AME consortium presented their final offers earlier this week. The consortium – Austrian firm AME, Intercomp and Italian firm Inso SpA, the suppliers of Mater Dei’s medical equipment – presented a EUR29,133,600 bid. iSoft presented a higher price at EUR29,630,153. . . In June 2006, iSoft announced a change in accounting policy which reversed GBP165 million of revenue it had booked upfront in the past three years. As a result, CEO Tim Whiston resigned in June 2006, with chairman John Weston taking over. According to Gartner, new chief operations officer Bill Henry has “no experience with complex clinical information systems”. iSoft’s share value dropped by 90 per cent this year after issuing a warning that revenues and profits from the UK’s National Health Service IT project (NPfIT) would be lower than expected, due to delayed delivery of iSoft applications. Irrespectively, iSoft spokesperson John White claimed last week that the company was a “strong” company, in a letter to MaltaToday. London’s Financial Times reported iSoft’s diatribe earlier this week, but iSoft denied it had complained about the coverage through the British High Commission. iSoft is providing three of the five regional contracts for the NPfIT. According to Gartner, iSoft’s Lorenzo software will require substantial investment and that iSoft “must ensure it will have the resources to make this investment. iSoft appears to have seriously underestimated the time and effort necessary to develop the Lorenzo application suite.” Although Gartner notes that such delays are unsurprising given the large scale of the project, it noted that iSoft’s reduced profitability and capitalisation “could impair its ability to accelerate this work, because delays in delivery Lorenzo applications will require iSoft to maintain its existing applications longer than anticipated.” iSoft provides software for the transmission of information from patients to doctors. Software licences are usually spread out over several years. While some companies pay a lump sum upfront, others pay in staggered amounts over the life of the agreement. Under CEO Tim Whiston however, iSoft often booked the full value of contracts and services as revenue upfront, regardless of how customers paid. This meant that in many cases it booked revenue which the firm would not see for several years.”
Inquiry into profits of NHS computer firm (24 Aug 2006)
The Guardian
http://business.guardian.co.uk/story/0,,1857404,00.html (Front page lead) http://business.guardian.co.uk/story/0,,1857221,00.html (Main story - business section)
The software company at the heart of the NHS's plans for a £6.2bn overhaul of GP and hospital computer systems is being investigated by the Financial Services Authority after revelations about irregularities in its accounts. The City of London regulator is believed to be examining whether iSoft misled investors over how much it had earned. This month, the company confirmed that a provisional inquiry by its auditors, Deloitte, had unearthed evidence that revenues for 2004 and 2005 had been booked in the accounts "earlier than they should have been". The Serious Fraud Office is understood to have been alerted to the situation at iSoft, but a file has not been referred to it or opened by it. . . Separately, the Guardian has given notice to iSoft that it will apply to the high court to remove a gagging order secured by the company to halt a Guardian investigation into its accounting practices in 2004. Breach of confidence and defamation laws meant the dispute ended in the Guardian being unable to publish information from two iSoft-related documents.”
Waiting for Lorenzo (24 Aug 2006)
e-Health Insider
http://www.e-health-insider.com/comment_and_analysis/index.cfm?ID=161
“A detailed review of iSoft’s development of Lorenzo, carried out by Accenture and Computer Sciences Corporation this year concluded that there is a “significant risk” the software will not meet NHS requirements as defined by NHS Connecting for Health. EHI has obtained a copy of the confidential report, which indicates the development of the Lorenzo system bought for the NHS IT programme remains fraught and is still at an alarmingly early stage. By February no module had yet been completed or tested and development plans for more complex later releases were sketchy at best. Overall the report paints a bleak picture of iSoft’s approach to project management and rigorous software development. It also reveals the company's limited readiness to share development plans with its prime contractors Accenture and CSC. The iSoft review warns that urgent steps must be taken “if we are to avoid the delivery of Lorenzo in a timeframe that will inevitably be far too late for CfH”. It further suggests the NHS may wind up with a solution “whose scope does not match that required by CfH, as it has not been defined from the top down with LSP in respect to the CfH requirements”. Lorenzo is the core clinical software at the heart of the NHS IT modernisation programme, and is meant to be delivered to 60% of the English NHS. The first versions of Lorenzo are now running two years late, having due to be delivered from 2004. . . The Lorenzo review, which involved a team visiting iSoft’s Chennai development facility in India, assessed 39 matters relating to Lorenzo. Nineteen were flagged up as "red" - meaning they required immediate work. Of particular concern were questions over iSoft's ability to plan, produce credible roadmaps for products, and estimate how long the development process would take. Damningly, the Lorenzo review found "no evidence for the development, nor testing of, technical procedures that would be required for operation and maintenance of the live system . . . this is the main risk to the successful delivery of a fit-for-purpose solution." One of the red flags was the absence of robust change control mechanisms. . .”
Isoft eyes bidders as it reports £343m loss (26 Aug 2006)
Financial Times
http://www.ft.com/cms/s/e3f9276e-349e-11db-bf9a-0000779e2340.html
“Isoft, the beleaguered software supplier to the £6.2bn National Health Service IT project, is considering several informal bid approaches as it looks to improve its precarious financial footing. It comes as Accenture - the consultancy that has taken a $450m (£238m) charge for possible losses on the same project - is attempting to renegotiate its involvement with the NHS scheme. If a deal goes ahead on either front, it would add to the sense of turmoil surrounding the world's largest non-military IT project, an ambitious plan that would allow doctors fast access to electronic patient records, but which is running about two years behind schedule. . . Several potential private equity and trade buyers are understood to have approached Isoft to buy all or part of its business. Isoft yesterday declined to comment. There was no news of any renegotiated deal with Accenture. Relations between Accenture and Isoft are understood to be fraught - each side blaming the other for delays to the project. Accenture insiders say the company's involvement in the NHS project has proved hugely damaging financially and reputationally. Accenture, CSC, Isoft and Connecting for Health, the NHS's IT procurement arm, all declined to comment on negotiations involving Accenture's future role.”
Ex-CBI boss caught up in NHS fiasco: Digby Jones drawn into row over iSoft as company reveals £344m loss (26 Aug 2006)
The Guardian
http://politics.guardian.co.uk/publicservices/story/0,,1858833,00.html (Front page lead)
http://business.guardian.co.uk/story/0,,1858786,00.html (Business section)
http://politics.guardian.co.uk/publicservices/comment/0,,1858814,00.html (Leader)
“Sir Digby Jones, one of Britain's best-known businessmen, was last night enmeshed in the worsening controversy over the government's £6.2bn effort to overhaul the NHS computer system. . . Sir Digby, who until recently was director general of the Confederation of British Industry, the "voice of British business", was an iSoft non-executive director in 2004-2005. This is the period when the accounting issues now under the microscope took place. He also served on its audit and remuneration committees. When Sir Digby was questioned during a Guardian inquiry into iSoft's accounting in August 2004, he said he had thoroughly investigated allegations put by the newspaper. Sir Digby, who made his name campaigning for high standards in corporate governance, accused the paper of "serious and unfounded insinuations of impropriety". He was "satisfied that the company has followed best practice". In a statement yesterday he said he "welcomed the investigation by [City watchdog] the Financial Services Authority into the affairs of iSoft. I will be making no further comment."
From the Leader: “Even more worrying than the corporate scandal is the fact that iSoft's failure to deliver on time could threaten the future of the massive health service reforms on which Labour has pinned many of its electoral hopes. The disaster scenario is that iSoft's problems will eventually trigger a domino collapse among other firms, halting the transformation of the NHS or postponing completion for yet more years. It could also be a swansong for Britain's indigenous health technology industry, a sector that had been flourishing until recently. Many of the smaller companies involved have been acquired by iSoft, which may find it hard to survive as an independent company.”
Accenture refuses to rule out dropping iSoft from NHS job (26 Aug 2006)
The Times
http://www.isoftplc.com/corporate/media_files/Preliminary_Results_April_2006.pdf
http://business.timesonline.co.uk/article/0,,9075-2328828,00.html
“Doubt surrounds IT company's contracts as it wins banks' backing and issues its twice-delayed results. ACCENTURE, the American information technology group that is rolling out new computer systems to GPs and NHS hospitals, refused to rule out dumping iSoft as a contractor yesterday as the British healthcare IT company said that it had secured backing from its banks for another 15 months. The US group refused to expand on its relationship with iSoft, beyond noting comments that it made in March, when it blamed iSoft for its expected losses on the NHS work and said that it was “actively exploring all options with respect to the contracts”. John Weston, iSoft’s recently appointed chairman, conceded that Accenture was “still looking at other alternatives”, but said that he was “reasonably optimistic” of a suitable outcome for iSoft. “We’re waiting to see what happens,” he said. ISoft is working on two contracts with Accenture, in the North East of England and the East Midlands. It is working with CSC, a rival to Accenture, on the North West and West Midlands regional deployment. CSC said yesterday that it was “fully committed” to iSoft as it extended an existing agreement with the company to supply its software to seven NHS trusts in London and the South East of England.”
Preliminary results for the year ended 30 April 2006 (26 Aug 2006)
iSOFT Group plc
“The second half of the financial year ended 30 April 2006 was a turbulent period for iSOFT and long-term shareholders will be feeling deeply disappointed by the events of recent months. . . LORENZO is iSOFT’s flagship strategic offering and it is central to the Group’s future. . . Within the NHS, hospitals and general practice surgeries vary enormously in the sophistication and maturity of their use of IT and their methods of working. The functional requirements which the software has to satisfy are also open to a number of different interpretations, which has led to disagreements with the LSPs about whether software meets the functional requirements. . . A number of difficulties experienced on the programme are outside the Company’s control, but some have resulted in formal correspondence being exchanged between the Company and both Accenture and CSC, alleging material contractual breach by the Company. . .”
Bidders prowling round troubled health service supplier Isoft (27 Aug 2006)
Sunday Times
http://www.timesonline.co.uk/article/0,,2095-2330116.html
BIDDERS are circling Isoft, the embattled software firm at the centre of the National Health Service’s multi-billion- pound IT upgrade programme. Health-industry sources said last night that BT and CSC, the American computer giant, were both looking over the company, although it was not clear whether either would bid. Both have big contracts under the NHS programme, to which Isoft is a key supplier. It is the software subcontractor in three of the five regional “clusters” under which the IT revamp is organised. Last week Isoft cemented an important additional supply deal with CSC. But Connecting for Health, the agency running the NHS programme, might take a dim view if either group decided to make a play for Isoft. “They are not particularly keen on the idea of a reduction in the number of suppliers to the programme, or in vertical integration between prime contractors and their suppliers, particularly when it involves such a key player as Isoft,” said one health-industry source.”
Millions advanced for crisis-hit NHS system (27 Aug 2006)
The Observer
http://observer.guardian.co.uk/uk_news/story/0,,1859513,00.html
The crisis surrounding the rollout of the NHS's multi-billion-pound computer system took a new twist last night when it emerged the government had paid a key contractor working on the project millions of pounds for services in advance of delivery. Paying for services up front is a highly unusual move when it comes to IT projects. The revelation has been seized upon by critics who claim the project is in danger of becoming a white elephant costing the taxpayer billions of pounds and appears to contradict statements made by the health minister, Caroline Flint, who told the BBC's Newsnight programme that 'we don't pay until we get delivery'. . . In a letter in today's Observer, Flint also maintains contractors are paid only 'once IT systems have been delivered, protecting the taxpayer'. . . However, a letter seen by The Observer, sent in May 2005 from Gordon Hextall, the project's chief financial officer, to all NHS trust executives, confirms that the Department of Health 'agreed to make annual payments to iSoft (the company supplying the software that powers much of the NHS's system) in respect of predicted charges payable by trusts/GPs'. The Observer understands these advanced payments totalled more than £30m. . . The Tory MP Richard Bacon, a member of the Public Accounts Committee, has a list of questions about where the money has gone. 'I want to know about every payment, how much it was, who paid it and who it went to,' Bacon said. 'There have been forward payments: we just don't know how many. This is a City scandal funded by the taxpayer.'”
What IT crisis? ministers ask (28 Aug 2006)
Daily Telegraph
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/08/28/cnhs28.xml
The Government last night insisted there was no risk to its multi-billion pound overhaul of the NHS computer system despite its main software supplier iSoft diving into the red, being investigated by the City's financial watchdog and openly squabbling with its partners. In a statement, the Department of Health said: "The NHS IT programme is not at risk of stalling, in jeopardy or close to collapsing because of iSoft's recent troubles. It [iSoft] confirmed that it will make its new software through 2008 - so in no way is the programme at risk." The news was greeted with incredulity by MPs from both main parties. Paul Farrelly, Labour MP for Newcastle-under-Lyme, said: "The Department of Health was alerted to iSoft in parliamentary questions over two years ago. It responded with a very complacent statement then. This is not the time to repeat that mistake. From iSoft's results announcement... it was quite clear that question marks remain over the future viability of the company." Richard Bacon, Conservative MP for South Norfolk who is also a member of the House of Commons' Public Accounts Committee, added: "The idea there is no risk at all around this project is nonsense." Last week iSoft revealed a pre-tax loss of £343.8m and admitted that it is being investigated by the Financial Services Authority over possible accounting irregularities. Auditors Deloitte & Touche gave a qualified opinion on its accounts which were published on Friday after delays.”
Press reports question future roles of iSoft and Accenture (29 Aug 2006)
e-Health Insider
http://www.e-health-insider.com/news/item.cfm?ID=2093
“Weekend press reports raised further questions over the future shape of the NHS National Programme for IT and the long term involvement of key software contractor iSoft, together with raising questions over the future involvement of consulting giant Accenture. . .”
Hewitt admits £82m payments to stricken iSoft (13 Sep 2006)
The Guardian
http://business.guardian.co.uk/story/0,,1871050,00.html#article_continue
“The government has admitted making two upfront payments, totalling £82m, to iSoft, the financially stretched software group playing a central role in the NHS's £6.2bn overhaul of computer systems in hospitals and GP practices across England. The health secretary, Patricia Hewitt, said payments of £58m and £23.8m were made to iSoft in 2005 and this year respectively. On each occasion, transfers were made just days before the company's financial year came to a close on April 30. . . The health secretary disclosed the upfront payments in a written answer to the Tory MP Richard Bacon, a member of the public accounts committee. Mr Bacon said: "It is hard to avoid the conclusion that Connecting for Health [the NHS's IT procurement arm] has repeatedly bent over backwards to try to rescue this company from its financial crisis, presumably to avoid the disaster that would hit it if a vital software supplier were to collapse. . . “
http://www.guardian.co.uk/letters/story/0,,1876289,00.html (Rebuttal letter from James Herbert, CfH Director of External Affairs)
ISoft problems surfaced after NHS pulled plug in April (15 Sep 2006)
The Guardian
http://politics.guardian.co.uk/economics/story/0,,1873013,00.html
The government refused a last-ditch request by iSoft, the troubled NHS software supplier, for a multimillion-pound up-front payment - on top of £82m already advanced by the Department of Health - in a move that precipitated the near financial collapse of the company. In April, the then chief executive Tim Whiston banked on delays to the NHS's £6.2bn National Programme for IT providing a short-term windfall for the firm. Because of the delays, he believed, a contract relating to its ageing software - used across almost 400 NHS trusts and GP practices - would have to be extended by the Department of Health. . . By April, not only did Mr Whiston expect the Department of Health to extend contracts relating to antiquated iSoft systems, but he anticipated payment would largely take the form of a multimillion-pound up-front sum. Connecting for Health, the NHS's IT procurement arm, told Mr Whiston there would be no contract extension and no up-front cash. The government had already made a £58m up-front payment to iSoft a year earlier - a vital cash injection helping the company to meet its financial targets for 2005. The payment was made after Mr Whiston and iSoft's three founders had begun building personal fortunes through the sale of shares. Mr Whiston made £5.2m after cashing in shares last year. ISoft founders Patrick Cryne, Steve Graham and the late Roger Dickens netted £41m, £30m and £10m respectively between 2001 and 2005. . . The disclosure that iSoft had received payments for work yet to be carried out is highly embarrassing for Ms Hewitt. The government has repeatedly insisted no cash would be paid for work on the National Programme until services are proven to be delivered and operational. Old iSoft systems, Ms Hewitt has stressed, are not part of the National Programme.”
Sheffield concluded iPM was 'not fit for purpose' (26 Sep 2006)
e-Health Insider
http://www.e-health-insider.com/news/item.cfm?ID=2155
“A confidential review of the two Local Service Provider versions of iSoft’s iPM patient administration system carried out by Sheffield Teaching Hospitals NHS Foundation Trust concluded the system was not, in its team’s opinion, “fit for purpose” and created “clinical risks”, due to a series of performance issues. The team looked at versions of the initial Care Records Service (CRS) software implemented by CSC in Birmingham and by Accenture in Scarborough. The Sheffield trust is in the North-eastern cluster being managed by Accenture. . .”
NHS computer system target will be missed in two weeks (17 Oct 2006)
The Guardian
"A key delivery target on the NHS's £6.2bn IT upgrade will be missed in two weeks time as the troubled project fails to meet a promise to have iSoft patient-administration systems installed at 20 acute trusts by the end of October. The latest NHS figures show 11 of the iSoft systems were operational at the end of September - just one more than when the promise was made to MPs in June. Richard Granger, NHS director general for IT, wrote to the public accounts committee four months ago detailing which acute hospitals would receive the iSoft systems by October 31. Promising 21 new patient-administration systems - 10 of them from iSoft - he told MPs the information was "as accurate and up to date as possible". Since then the only new acute trust to be added to the list of iSoft users under the NPfIT has been Robert Jones & Agnes Hunt, a specialist orthopaedic trust in Shropshire. . . The NHS had planned to have more than 100 acute hospitals operating patient-administration systems and clinical systems by April this year. Patient-administration software is one of the first building blocks of the NPfIT. It handles appointments and patient movements around hospitals. Clinical tailored systems hold information on blood tests and other investigations as well as best practice for treatments. There are no NPFfIT clinical systems installed anywhere as yet. . ."
iSoft 'in talks with potential buyers' (17 Oct 2006)
e-Health Insider
"iSoft, the UK health software vendor, has announced that it will open discussions with potential bidders and partners to clarify the strategic options open to the company. The company said this morning confirmed that it has received expressions of interest in buying the group and is in talks with potential buyers. It has appointed advisors and said that discussions “may or may not lead to an offer for the company”. . ."
ISoft puts itself up for sale as it sees off shareholder rebellion over pay (18 Oct 2006)
The Guardian
http://business.guardian.co.uk/story/0,,1924592,00.html
"ISoft, the troubled software supplier to the National Health Service, put itself up for sale yesterday in an effort to secure its future after warning yet again about falling sales. The firm also suffered a blow as a shareholder revolt over pay deals for directors saw 40% of votes at its annual meeting in Manchester cast against iSoft's remuneration report. . ."
iSoft and its former auditors targeted by accounting inquiry (25 Oct 2006)
The Guardian
http://business.guardian.co.uk/story/0,,1930678,00.html
"Accountancy regulators are to investigate troubled NHS software supplier iSoft over "recent events" at the firm and the conduct of management, auditors and non-executive directors. The Accountancy Investigation and Disciplinary Board has decided to focus on financial statements from 2003 to 2005. Two months ago iSoft said an investigation by Deloitte, its new auditor, had unearthed "accounting irregularities" relating to 2004 and 2005. It suspended co-founder Steve Graham from his post as operations director and also pointed the finger at "other employees" who had since left the business. The AIDB's decision to delve further into iSoft's past is understood to have been made without consulting the company, which is under new management. Meanwhile, the Deloitte report has been handed to City watchdog the Financial Services Authority, which is carrying out its own investigation into whether iSoft statements misled investors . . ."
Backers sought for beleaguered iSoft (26 Oct 2006)
VHUnet
http://www.vnunet.com/accountancyage/analysis/2167308/backers-sought-beleaguered
"iSoft under pressure to deliver National Programme for IT
Under-fire healthcare IT company iSoft has put itself in the shop window in a bid to resurrect its ailing fortunes. The decision concludes a catastrophic financial year for the once-booming AIM company as management decided to seek backers before iSoft fortunes took a further nosedive. The news was released hours before iSoft’s AGM, which did nothing to appease its long-suffering shareholders, but hopes of attracting a potential buyer were dealt a massive blow on the eve of the highly-charged meeting. It emerged that serious problems with one of iSoft’s most complex hospital computer system installations were threatening to wipe more than £16m off the expected income of an NHS Trust hospital. The University Hospital of North Staffordshire, which is struggling to claw back debts from last year of £15m and is shedding 1,000 staff, is having problems getting the new IT system to generate basic information on patient treatments in order to send bills to the primary care trusts. It said the problem could leave the trust short by between £4.5m and £16.2m for the full year. ‘The sums look pretty scary,’ said its finance director, Mark Mansfield last week. . ."
Revealed: iSoft's U-turn on accounts problems (2 Nov 2006)
The Guardian
http://politics.guardian.co.uk/egovernment/story/0,,1937306,00.html
"The software company at the heart of the NHS £6.2bn IT overhaul added £30m to its revenues in 2004 in a move that had the effect of misleading the stock market, the Guardian can reveal, following the lifting of a gagging order which has prevented the publication of an investigation into accounting irregularities at the firm. The investigation discovered that questionable accounting at iSoft can be traced back to 2002. It suggests the company's non-executive directors past and present, including Sir Digby Jones, a former non executive director and former director general of the Confederation of British Industry, were called to deflect questions about the company's accounting. ISoft is now being investigated by the Financial Services Authority and the accountancy profession's disciplinary body. The authorities indicated yesterday that the information gathered by the Guardian in 2004, but suppressed for two years, would be reviewed as part of their continuing investigations. . . For two years, iSoft claimed information the Guardian had found relating to £30m in revenues came from confidential company papers containing errors that were later corrected. Yesterday iSoft's new management conceded the information in the original documents seen by the Guardian was accurate. The £30m figure was much higher than investors had expected. The glowing full-year results reported in June 2004 pushed iSoft shares to a new high of 446p. A week later five directors and a company founder sold shares worth £44m. . ."
iSoft’s future uncertain after more losses (11 Dec 2006)
Computer Weekly
"Troubled healthcare IT firm iSoft, a key supplier to the NHS’s £12.4bn National Programme for IT (NPfIT), has admitted it may not survive after six-month results showed further losses. The firm revealed pre-tax losses of £14.3m in the six months to 31 October, with revenues down by 11.6%. The losses figure includes £11.6m of exceptional costs relating to restructuring, including redundancies and the closure of the firm’s former Manchester head office. The results announcement said the supplier, which is contracted to provide its Lorenzo care records system as a core part of the NHS scheme, was “now delivering NPfIT milestones on schedule”. . . In a statement released with the results, iSoft warned, “In preparing these projections the directors recognise that there are material uncertainties that may cast significant doubt on the Group’s ability to continue as a going concern.”
iSoft in talks with Irish health service after admitting it won't deliver on time (12 Dec 2006)
The Guardian
http://business.guardian.co.uk/story/0,,1969936,00.html
"iSoft, the debt-laden NHS software provider, is in discussions with the Irish health service after conceding it would be unable to deliver elements of the group's next-generation software, Lorenzo, on time. John Weston, the chairman, insisted the discussions were "amicable" and that "everybody is happy" with older, stop-gap computer systems installed in 19 hospitals in the Republic of Ireland. "I wouldn't get overexcited," he said. "It's a couple of technicalities really." iSoft is further in breach of its contract with the Irish government after failing to provide a letter of credit when the group's net assets fell below an agreed €75m (£51m) threshold. Mr Weston said such a move was "kind of difficult to do" given iSoft's already fully stretched finances. . . Under the NHS's £6.2bn National Programme for IT, iSoft's software is earmarked to be provided in 60% of GP practices, hospitals and other health trusts in England. Accenture and CSC, the consultancy firms responsible for deploying the software, did not install any of iSoft's patient administration systems in acute NHS trusts in the half year."
Auction of iSoft nearing conclusion (23 Jan 2007)
The Times
http://www.timesonline.co.uk/article/0,,29390-2561009.html
"At least three final-stage bidders are being vetted by iSoft’s key £6.2 billion NHS contractor as the sale of the beleaguered IT firm for about £200 million nears, The Times has learnt. It is understood that two American healthcare firms — Cerna and McKesson — and General Atlantic Partners, the American private equity firm, are meeting Computer Sciences Corporation (CSC), a top NHS contractor that subcontracts the government work to iSoft. “It’s got to a critical stage where to get any further they need to meet with CSC,” a source close to the process said. John Weston, iSoft chairman and acting chief executive, told shareholders in October at the company’s annual meeting that it had been approached by financial and trade buyers that were keen to buy the company, take a large stake or form an alliance and that the board had entered talks. Sources close to the process said that iSoft had been in discussions ever since and has narrowed the bidders to a shortlist of three or four. The bidders have had access to its books to conduct due diligence and are ready to proceed with final bids. . . ISoft was given a lifeline by its banks, but the interest-rate payments on the loans are such that it needs to find new equity fast, or face another cash crunch, the sources said. Of the three bidders, General Atlantic Partners already owns a small stake of about 6 per cent in iSoft and is thought to be keen to snap up more. It recently bought a healthcare software firm Eclipsys in the United States and could derive synergies from the two. McKesson is one of the largest drugs distributors in the US but has been slow to expand overseas. Cerna runs the other key NHS contracts that iSoft does not already own, in London and the South, so buying up iSoft would effectively put the American company in control of all the UK’s patient records systems. If CSC can not get comfortable with any of the bidders, then it could bid for iSoft itself, the sources said, although it is in the IT firm’s interest to push through a sale, they added. . ."
ISoft sale falters as suitor's demands rejected (14 Feb 2007)
The Times
http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article1381585.ece
"The £200 million sale of iSoft could be in jeopardy after talks with the preferred buyer were put on hold, potentially forcing the beleaguered IT company to consider a rights issue, The Times has learnt. It is understood that American drugs distribution company McKesson was front-runner to buy iSoft but in recent weeks talks with Computer Sciences Corp (CSC), iSoft’s key NHS contractor, have broken down over certain contract conditions that McKesson wants included as part of any deal. “McKesson would be the best buyer because they’re a cash bidder, but they would have to be persuaded to drop all their current demands,” a source close to the sale said. “Until they do that, they’ve been told that they’re not going forward.” Two other bidders, General Atlantic Partners, a US private equity firm, and IBA Health, a listed Australian healthcare firm, also made it on to the shortlist. But talks with General Atlantic are also on hold because the US firm is proposing a debt for equity swap on terms not acceptable to CSC, while IBA would need a large rights issue, which makes it unlikely to succeed, sources said. Shares in the IT group lost more than 90 per cent in 2006 after a string of profit warnings and the discovery of accounting irregularities, which led iSoft to restate its accounts and wipe out most of its profits. The scandal is the subject of a continuing investigation by the Financial Services Authority. . ."
Australian firm in talks to buy NHS software group (17 Feb 2007)
The Guardian
http://business.guardian.co.uk/story/0,,2015199,00.html
"IBA Health, a small Australian IT group with a turnover of only £24m, confirmed yesterday it is considering an audacious takeover of iSoft, the debt-laden software company at the heart of the government's troubled £6.2bn NHS IT upgrade project. The proposed deal is believed to be all in shares, though IBA will have to raise huge amounts of debt to plug iSoft's working capital shortfall and refinance its increasingly crippling borrowing commitments. It is understood to be in discussions with investment bank ABN Amro. . . Under pressure to strike a deal, iSoft last summer said it needed two years of "significant additional working capital facilities", having previously won up-front payments for work it is now carrying out. There will be no net cash coming in until May 2008. Onerous debt-related commitments were raised last month and will increase again at the end of March."
NHS seeks rival IT firms as trusts lose faith in iSoft (5 Mar 2007)
The Guardian
http://business.guardian.co.uk/story/0,,2026498,00.html
"The NHS will start recruiting alternative software suppliers to its troubled £6.2bn IT upgrade project this month, in a move which could see the government's vision for a single IT system for the health service in England unravelling. The move is a tacit admission that a fully integrated IT system may never be completed. NHS bosses had until recently discouraged hospital trusts from deserting the scheme. But disaffection is now so widespread and delays so long that officials are working on a list of accredited alternative suppliers, which is widely seen as a move to appease hospital trusts. Under the government's National Programme for IT (NPfIT), trusts were promised centrally bought software to be installed from mid-2004 - all free of charge to them or heavily subsidised. As a result, hospital trusts held back from buying new systems, content to get by with their old software in the belief that NPfIT would soon deliver replacements. But these have now been delayed for so long that trusts are seeking alternatives. New plans to introduce alternative suppliers with proven products that are ready to install is likely to prove a particular blow for the financially stretched iSoft, which relies on its NHS systems for income. . . Last October the NHS IT boss, Richard Granger, played down the significance of an alternative supplier list, suggesting it was "in the event of things going wrong". Some industry insiders see the introduction of alternative suppliers as a step towards a more radical "interoperability" model, similar to that proposed by senior members of the Commons public accounts committee - the Conservative MP Richard Bacon and the Liberal Democrat John Pugh - last year. Mr Bacon cautiously welcomed NHS plans for an alternative supplier yesterday: "This may be an important step towards building an IT programme for the NHS that could actually work but it will only be effective if local trusts are given real freedom of choice quickly. The [alternative supplier] catalogue needs to include all key systems - including PASs as well as clinical and departmental systems - and it needs to make them available within months rather than years." Other suppliers such as EuroKing, Clinisys, Ascribe and System C are likely to make significant inroads into iSoft's user base as these companies have already been winning several contracts with trusts that have lost patience with NPfIT promises. ISoft is still in talks with a much smaller Australian firm, IBA Health, which is considering an all-share takeover offer. ISoft said last summer it needed two years of "significant additional working capital", having previously won upfront cash for work it is now carrying out."
Suspended iSoft co-founder removed from board (28 Mar 2007)
e-Health Insider
http://www.e-health-insider.com/news/item.cfm?ID=2576
"Co-founder of iSoft, Steve Graham, who was suspended from his post as commercial director in August last year after an initial investigation into accounting irregularities, has been removed from his place on the board. An announcement from the troubled healthcare IT software firm yesterday, said: “The company is today announcing that Steve Graham has been removed as a director and has ceased to be an employee of iSoft.” An iSoft spokesman said that company would not be replacing Graham in short term. Asked about compensation for loss of office, he said: “We are not paying any compensation.” Graham remains an iSoft shareholder. iSoft holds contracts for supplying major healthcare IT systems in three of the five English regions covered by the National Programme for IT. Delays in delivering systems lie at the heart of the company’s problems which have seen its share price plunge from over £4 to yesterday’s closing price of 35.75p. In recent months, rumours of an imminent acquisition of the company by various potential buyers have circulated but not yet come to fruition."
iSoft director says NPfIT systems 'interchangeable' (3 May 2007)
e-Health Insider
http://www.e-health-insider.com/news/item.cfm?ID=2662
"Nick Harte, product management commercial director at iSoft, says the systems being delivered into the five clusters of the English NHS National Programme are all “interchangeable”, thanks to Connecting for Health’s decision to adopt a Service Orientated Architecture based around the spine services. Harte, who led the development of iSoft’s Lorenzo product, said that this approach, combined with mandating of tough standards, means that iSoft could in theory now deliver elements of its software the South and London, with Cerner potentially doing the same into the three clusters iSoft software has been chosen fo. . . Speaking at a recent European E-Health Conference in Berlin Harte said the decision had been taken by CfH to begin by first replacing NHS organisation’s core patient administration systems – a task he described as extremely challenging. “We had to replace the engines while in flight”. He told the audience that “the National Programme had wanted a very, very aggressive timetable”. Despite the initial pain he said the NHS National Programme for IT (NPfIT) had taken the right route in mandating tough standards and adopting a Service Orientated Architecture (SOA), the benefits of which were now being seen. . . Through its national procurement, NPfIT had “defined standards and demanded ruthless adherence to them.” Harte stressed this ruthless standardisation included prohibiting local NHS trusts from selecting their own systems “It doesn’t allow individual trusts to do their own procurements.” Referring to the way IT systems had previously been bought by NHS organisations he said: “Because the way we purchased and procured systems was never going to support the patient journey.” In the old world of local NHS IT procurements, he said “requirements for an integrated architecture were always an afterthought.” But with an SOA and the national core systems now in place he said that the national programme was being made more locally responsive, with a local ownership programme now being introduced. “It will be possible for local SHAs to determine what systems they want, or at least what order they come in.” Harte said that, with standards and core national infrastructure now in place, the additional supplier procurement was a “logical next step”, which he described as a “vindication” of Connecting for Health’s approach. . . Identifying the key lessons that others could learn from the programme he cited the need for a SOA model to deliver at scale, providing the core infrastructure and business services “you can then plug in around the periphery.” He also urged others not to try and develop and deliver software simultaneously. “Don’t mix development with delivery – there are already a lot of good things out there today.”
NHS upgrade at risk after IT firm's rescue bid is blocked (30 May 2007)
The Guardian
http://business.guardian.co.uk/story/0,,2090881,00.html
"The future of NHS software supplier iSoft was thrown into doubt yesterday after a rescue takeover offer for the business was blocked. iSoft now has until November to secure an urgent cash injection or go bust - a move that could be calamitous for the government's £6.2bn NHS IT upgrade. iSoft last month told investors it was recommending an all-share rescue offer from IBA Health, a much smaller Australian rival. The proposed deal was to come with new equity and debt to fund iSoft's urgent need for working capital. The deal was effectively blocked yesterday by consultancy firm Computer Sciences Corporation, which deploys iSoft's software under the government's troubled National Programme for IT (NPfIT). CSC's contract with iSoft contains a "change of control" clause which gives the US firm the right to ditch iSoft if the business is sold. . . Should iSoft collapse into administration and alternative software suppliers be appointed, it could set back NPfIT by more than a year. The programme is already two years behind schedule. Many analysts believe no alternative rescue bidder is likely to emerge, leaving a refinancing deal as iSoft's only other hope of survival. If iSoft directors believe there is no possibility of securing the required cash they will be forced to review whether the business is a going concern. . ."
CSC says iSoft deal not in 'best interests' of NPfIT (30 May 2007)
e-Health Insider
http://www.e-health-insider.com/news/item.cfm?ID=2730
"Computer Sciences Corporation, local service provider to three NHS regions, today said that it has refused to back the IBA takeover of iSoft in the ‘best interests’ of the National Programme for IT (NPfIT). The LSP, which holds contracts for the North, Midlands and East regions, confirmed today that it has vetoed the takeover of iSoft by Australian firm IBA Health. In a statement CSC said: “CSC is committed to the successful delivery of the NHS National Programme for IT (NPfIT). CSC's decision not to consent to the proposed change in control of iSoft has been governed solely by what it considers is in the best interests of achieving this goal.” CSC said that it had been working with iSoft to find a suitable buyer, but discussions with IBA have left them concerned about the impact the sale would have on the work on NPfIT. “Discussions and correspondence regarding IBA commenced in January, and we have continued in active dialogue with the company up to the present date. During this time, CSC has undertaken due diligence to assess the impact of the IBA transaction on NPfIT. “Our ongoing discussions and correspondence with iSoft clearly reflected CSC's concerns and position, resulting in CSC confirming on 28 May, that it does not intend to consent to the IBA transaction.” They add: “CSC has engaged with iSoft and its banks to explore ways to underpin the long term financial stability of iSoft.” CSC is currently deploying iSoft’s iPM and iCM systems into trusts in the North, Midlands and East and are working on the Lorenzo solution with iSoft. . ."
CSC considers rival bid for Isoft (6 Jun 2007)
Financial Times
http://www.ft.com/cms/s/771cb248-1407-11dc-88cb-000b5df10621.html
"Computer Sciences Corporation confirmed on Wednesday that it was considering a bid for troubled healthcare software company Isoft, its partner in the £12.4bn National Health Service IT programme (NPfIT). Any bid by California-based CSC for the UK group would rival an all-share offer from IBA Health, of Australia, which valued Isoft at about £140m. CSC, which is responsible for delivering Isoft’s software as part of the much delayed NPfIT, the world’s largest civilian technology project, said it was considering an all-cash offer. “Computer Sciences Corporation continues to review its options in light of this objective, including its contractual rights and obligations, and does not exclude the possibility of making an offer for Isoft,” CSC said in a statement. . ."
NHS issues ultimatum to resolve iSoft dispute (7 Jun 2007)
Guardian
"NHS bosses have forced iSoft and other squabbling companies linked to the troubled £6.2bn health service IT upgrade to suspend an increasingly acrimonious dispute over the software firm's future and attempt to reach a compromise before the business goes bust. Richard Granger, the director general of NHS IT, has made it clear that he will invoke draconian intervention rights - tearing up billion-pound contracts and replacing suppliers - if the dispute over iSoft's future is not resolved swiftly. His warning yesterday led to emergency talks between iSoft, its largest customer CSC, and IBA Health, the Australian firm proposing an all-share takeover for iSoft. The three had become embroiled in a bitter row after CSC used a "change of control" clause in its contract with iSoft to block IBA's agreed takeover. ISoft, which will go bust if it does not receive a substantial cash injection by November, responded by filing a legal claim against CSC suggesting the American IT firm was unreasonably blocking the IBA deal to further its "wider interests". That action has now been frozen and NHS IT bosses expect the talks to end in CSC allowing the IBA offer to proceed in exchange for the US firm gaining greater control of Lorenzo, iSoft's software package being developed for the NHS's national programme for IT (NPfIT). . ."
CfH on standby to take over Lorenzo development (7 Jun 2007)
e-Health insider
http://www.e-health-insider.com/news/item.cfm?ID=2762
"Connecting for Health, the Department of Health body responsible for the NHS IT programme, is reported to have warned Computer Sciences Corporation and iSoft that it is prepared to step in and take over development of iSoft's Lorenzo patient record software if the companies cannot resolve differences. Today's Financial Times newspaper cites DH sources as saying, a team has already been put on standby to take over if required, following a meeting reported to have taken place between the two companies and CfH boss Richard Granger on Monday. According to the FT CfH is now so alarmed at the potential for a dispute between CSC and iSoft to derail the whole programme that it is now threatening to exercise its full step-in rights on the development of Lorenzo. The official line from CfH last week was that the future of iSoft was a matter for its prime contractor CSC to sort out. Lorenzo is the next generation clinical software that iSoft is contracted to deliver for CSC to install in 60% of the English NHS as part of the NHS IT programme. The troubled software programme is already over two years late with development still underway. . ."
iSoft's last ditch hope (19 Jun 2007)
The Guardian
http://politics.guardian.co.uk/publicservices/story/0,,2106234,00.html
"Cash-strapped NHS software supplier iSoft has agreed to surrender management of its lead development product in a last ditch deal to secure the firm's financial survival. The deal provides an awkward truce between iSoft and its largest customer, US consultancy firm CSC. The two have had an uneasy relationship after development of iSoft's Lorenzo software in India fell behind schedule. CSC is contracted to deploy Lorenzo across 60% of the NHS in England. The American group will now take full management control of Lorenzo, which has been described by iSoft as its "flagship strategic offering . . . central to the group's future". Isoft will pick up the development wage bill and retain licensing rights outside of CSC's contracted work in England. In exchange, CSC will give its blessing to an all-share takeover of iSoft by the Australian firm IBA which secures the British company's future. CSC had previously invoked a clause in its contract with iSoft to block the deal and iSoft had responded with a legal action claiming the US firm was acting unreasonably. Isoft yesterday said it would see the value of its Lorenzo contract with CSC cut by 5%, though revenues will still be "in excess of £300m". Because iSoft is no longer in charge of the project, CSC has agreed to stagger two-thirds of payments over time rather than pegging them to Lorenzo's revised delivery schedule. The deal between iSoft, CSC and IBA came after the intervention of outgoing NHS IT boss Richard Granger. He said he would use draconian intervention rights, tearing up contracts and replacing suppliers, unless a compromise was reached. Isoft chairman John Weston said: "Our relationship with CSC has clearly been tested in recent weeks, however, this agreement underpins our good working relationship which we look forward to continuing."
CSC to buy iSoft division working on key NHS system (23 Jul 2007)
ComputerworldUK
http://www.computerworlduk.com/management/it-business/supplier-relations/news/index.cfm?newsid=4128
"Lorenzo system will pass to key health service contractor in iSoft carve-up. NHS contractor CSC is set to buy the division of troubled software supplier iSoft that is developing the Lorenzo care records system at the heart of the NHS’s £12.4bn National Programme for IT (NPfIT). The news follows the shock decision of the iSoft board to recommend a £160m bid for the company by German firm Compugroup in place of an expected £140m takeover by Australian firm IBA. Continuing uncertainty over the future of iSoft has raised questions over the delivery of the Lorenzo care records system – which is already running more than two years late. Lorenzo is set to be supplied as a crucial NPfIT component in three out of five regions where CSC is the lead contractor. CSC had initially blocked iSoft’s move to sell to IBA, because it felt this would not support delivery of Lorenzo. But after iSoft threatened legal action – and NHS Connecting for Health, which runs NPfIT, intervened to bring the two sides together – the two companies agreed to integrate their teams working on Lorenzo, under CSC’s leadership and the IT services firm gave the green light to IBA’s acquisition. CSC, which already had around 100 of its own staff working on Lorenzo within iSoft, was expected to step up that number and assume greater control. But now that iSoft has abandoned the IBA takeover in favour of a higher cash offer from Compugroup, CSC will take ownership and control of the business delivering Lorenzo to NPfIT. The lead NHS contractor has confirmed that it has “held discussions with Compugroup and that it will acquire those parts of iSoft relating to development of Lorenzo for the NHS”. . ."
NHS care records system 'in safer hands' with CSC than iSoft (26 Jul 2007)
ComputerWorldUK
http://www.computerworlduk.com/management/it-business/services-sourcing/news/index.cfm?newsid=4203
"The NHS can have “more confidence” in the development of its centrepiece care record system after CSC agreed to buy parts of troubled software supplier iSoft, analysts believe. The crisis-stricken software firm is contracted to supply its Lorenzo care record system as the core element of the NHS’s £12.4bn National Programme for IT (NPfIT) in three out of five regions where CSC is the lead NHS contractor. But uncertainty over the future of iSoft has increased concern over the delivery of Lorenzo, which is already running more than two years late. In a shock move earlier this week, the iSoft board abandoned its planned sell-out to Australian firm IBA in favour of a £160m cash offer from German firm Compugroup. The announcement was followed by news that CSC would itself buy the parts of iSoft that are developing Lorenzo for the NHS. CSC will acquire all iSoft's NPfIT contracts, along with an NHS version of Lorenzo and the existing iSoft NPfIT products, i.Patient Manager and i.Integration Engine. The complex deal will mean Compugroup will also be free to develop its own version of Lorenzo – and may try to sell future versions to the NHS – as well as retaining responsibility for iSoft's NHS legacy products. Ovum analyst Tola Sargeant said NHS Connecting for Health (CfH), the agency that runs NPfIT, could “have more confidence that the development of Lorenzo is in the hands of a company it trusts” when it is taken over by key contractor CSC. The NHS would also “know who to blame if things go wrong with the NPfIT rollout”, she said. But Sargeant added: “With CSC becoming a software provider as well as the prime contractor, it will be harder for NHS CfH to switch software if Lorenzo doesn't come up to scratch.” CSC will take on “more risk but gains more control over its own destiny” as a result of the planned acquisition, Sargeant said. . ."
iSoft will deliver NHS system to CSC 'in new year' (6 Aug 2007)
ComputerWorldUK
http://www.computerworlduk.com/management/it-business/services-sourcing/news/index.cfm?newsid=4422
"Troubled NHS software supplier iSoft will deliver its Lorenzo care records system to CSC by early 2008, it has said. This will leave the way clear for CSC to start rolling it out to the NHS National Programme for IT from mid-2008 onwards. It set out the timetable in posting a 13% drop in revenues to £175.2m and a 50% fall in normalised operating profits as it limps towards its acquisition by German firm CompuGroup. The software supplier is contracted to provide the Lorenzo care records system as the core part of the NHS's £12.4bn National Programme for IT (NPfIT) in three out of five regions where CSC is the lead contractor. But the turmoil surrounding the company has increased concern about the delivery of Lorenzo, which is already running more than two years late. Last month, iSoft announced its shock sale to CompuGroup, abandoning previous moves to sell to Australian firm IBA. . . CompuGroup is set to buy iSoft for £160m and will also buy out its debts. But CompuGroup has agreed that CSC will then acquire all iSoft's NPfIT contracts, along with an NHS version of Lorenzo and the existing iSoft NPfIT products i.Patient Manager and i.Integration Engine. . . Weston said this would mean CSC gaining 700 staff in the UK and India from iSoft - about a quarter of the software firm's total staff. Roll-out of the latest version of Lorenzo was now taking place at sites in Germany and the Netherlands, Weston said. . . NHS trusts' existing iSoft applications would be upgraded to Lorenzo functionality from mid-2008 onwards to provide a phased, low-risk migration of systems, he added. The CompuGroup takeover is expected to be agreed by iSoft shareholders at a meeting set for 31 August."
Bradshaw promises Lorenzo and Millennium by summer (1 Apr 2008)
e-Health Insider
http://www.e-health-insider.com/news/3604/bradshaw_promises_lorenzo_and_millennium_by_summer#c8701
"Health minister Ben Bradshaw has said despite ongoing delays new Lorenzo and Millennium software will be delivered to NHS sites this summer. Replying to a parliamentary question the minister also confirmed last week that development work on Cerner Millennium for the South of England had ceased while the NHS remains in a deadlocked contract dispute with Fujitsu and Cerner. The minister also addressed concerns about the financial stability of iSoft's parent company, IBA Health, saying this had been verified by iSoft's prime contractor on the NHS IT programme Computer Sciences Corporation (CSC). O'Brien asked for the minister's assessment of the progress of the development and implementation of the delayed Lorenzo and Millennium clinical systems. The health minister said regular reviews were being conducted and promised new systems by the summer. . . Commenting on when Lorenzo will finally be deployed to NHS sites, Bradshaw said: "It is understood that the development plans will enable the deployment of Release 1of Lorenzo into early adopter sites in the North, Midlands and East Programme for information technology, formerly North West and West Midlands, North East and the East Midlands, in the summer." . . . On the development of Millennium software by Cerner, to be delivered in the South by Fujitsu, Bradshaw said eight hospitals were currently using the software, but confirmed further development and deployments remain on hold until deadlocked contract negotiations are resolved. "The development of the Cerner Millennium by Fujitsu in the South of England, where eight hospitals are using the Release 0 version of the software is the subject of a current contract reset." The minister said BT has delivered Millennium software to two London hospitals since last summer "and a further deployment is now due". He said the next Release LC1 "is due to be implemented in the summer". All the LSPs confirmed to EHI that the minister's answers were factually correct. Though trusts are now responsible for deployment plans under the National Programme for IT Local Ownership Programme (NLOP), NHS Connecting for Health (CfH) are responsible for reviewing and assessing the delivery of systems by LSPs. . ."
NHS says Lorenzo won't be complete until 2016 (20 May 2008)
e-Health Insider
http://www.e-health-insider.com/news/3764/nhs_says_lorenzo_won%E2%80%99t_be_complete_until_2016
"North West Strategic Health Authority says it does not expect full installation of the strategic Lorenzo electronic patient record software until 2016, a year later the date set out in last week's National Audit Office report. A board paper from the SHA says a new contract between CfH/NHS and local service provider (LSP) CSC is due to be signed that will stretch out deployment dates into 2016. First meant to be delivered at the end of 2004 Lorenzo is already running four years late. Last week's NAO report on the NPfIT programme said delivery of the late-running software to NHS trusts is not exepcted to be completed until 2015. The NAO report said delivery by the end of 2015 would represent a four-to-five year delay. However, the NAO report said repeated past delays raised questions over the latest roll-out timetable. "There is considerable uncertainty about when the care records system will be fully deployed and working across the country." The extent of this uncertainty is highlighted in the North West SHA paper. "Included within the Project Agreement (contract) is a revised plan for deployment of the LSP up to 2016," states the SHA Board paper from May 2008. . ."
Minister confirms low Lorenzo usage (17 Dec 2008)
Kablenet
http://www.kablenet.com/kd.nsf/FrontpageRSS/C508502F29AA98728025752200376E45!OpenDocument
"Health minister Ben Bradshaw has acknowledged that so far just 24 people are using one of the core systems in the NHS National Programme IT (NPfIT). Bradshaw said that University Hospitals of Morecambe Bay Trust is making "limited clinical usage in a single ward, with 10 system users", of the Lorenzo patient administration system. At South Birmingham Primary Care Trust the system is restricted to the 14 user podiatry team. In a written parliamentary answer on 16 December 2008, he added that Bradford Teaching Hospitals foundation trust will go live in the new year with Lorenzo. Lorenzo software is being developed iSoft for use by all trusts in the north, Midlands and east of England, where CSC is the NPfIT local service provider. In reply to questions from Conservative MP Richard Bacon, Bradshaw confirmed delays in the release schedule for the software. As part of a contract reset in January 2007, the intention was for Lorenzo release 3.5 to appear by 30 June 2008 and release 4.0 by 30 June 2009, but the minister said that Lorenzo release 2.0, containing care management functionality, should now be available for testing in the UK by the end of December."
NPfIT officials threatened Foundation trust with penalty (15 Jan 2009)
Computer Weekly - Tony Collins' IT Projects Blog
http://www.computerweekly.com/blogs/tony_collins/2009/01/npfit-officials-threatened-fou.html
"Health officials sought to discourage a foundation trust from buying systems outside the NHS IT scheme by threatening to charge for national software even if the trust bought an alternative system, Computer Weekly has learned. The threat, if carried out, could have left Rotherham paying for two hospital systems when it needed only one. The board of Rotherham NHS Foundation Trust has gone to open competitive tender for a hospital administration system. It is due to make a decision shortly on which system to buy. But officials regionally and centrally want trusts in the Midlands and north of England, including Rotherham, to commit to the "Lorenzo" system which is due to be delivered under the £12.7bn National Programme for IT. Brian James, Chief Executive of the Rotherham trust, revealed in an interview with Computer Weekly that health officials had threatened to charge his trust for Lorenzo- even if the trust buys an alternative technology. Computer Weekly understands that health officials have made similar threats to foundation trusts in other areas. If carried out it would leave trusts paying millions of pounds for systems they do not install - money that could end up the NPfIT suppliers as compensation for deployments that Whitehall contractually promised but which didn't happen. . . James said his trust needs to replace its "Totalcare" patient administration system from US-based healthcare specialist McKesson because support for the product is being withdrawn in 2010. Rotherham could not wait for Lorenzo. "We have been unable to get any firm dates for the delivery of Lorenzo," said James. Asked by Computer Weekly if health officials had put financial pressure on Rotherham to buy Lorenzo, James said: "They told us we would probably have to pay more. We would have to pay for the system they would have given us [in addition to any other system the trust bought]. It would still from a financial perspective pay us to do that." If all trusts buy from BT and CSC, it will help the Department of Health's NHS Connecting for Health to meet its contractual commitments to the suppliers. CSC and BT have £4bn worth of NPfIT contracts which commit the Department of Health to giving them a minimum amount of business. If trusts refuse to buy from the two suppliers, the companies can levy a "non-deployment" charge. A lawyer, John Yates, a partner at legal firm Beechcroft, said in an article last year that non-deployment charges were becoming a bone of contention between trusts and the Department of Health. . ."
