EXCLUSIVE: NOS implementation cost for DHBs could be $45m

Return to eHealthNews.nz home page

eHealthNews.nz editor Rebecca McBeth 

More than $9 million has been spent by four district health boards on implementing the National Oracle Solution – on top of the more than $100 million spent developing the solution so far.

Bay of Plenty, Canterbury, Waikato and West Coast DHBs went live with the shared finance, procurement and supply chain system on 2 July 2018.

New Zealand Health Partnerships is leading the design and build of NOS on behalf of the country’s 20 DHBs, which are all due to implement the solution. If these implementation costs represent an average per DHB, the total implementation cost would be around $45 million.

The system was at the centre of controversy earlier this year, following the release of an independent review of NOS by Deloitte detailing the challenges facing the project that have led to major delays and cost overruns.

Health Minister David Clark said in September 2018 that more than $100 million had been spent developing NOS already and there was “little to show for” the investment.

The Ministry of Health commissioned Deloitte to review the NOS programme to inform its advice to the Government after NZHP asked for a further $22.8 million to fund the project.

The review says substantial further investment would be required, as this extra cost does not cover DHB implementation and change management costs, Pharmac change costs, ongoing support and maintenance or future roll-out waves.

eHealthNews.nz asked the DHBs in Wave 1 of the roll-out what their implementation costs were so far.

Bay of Plenty DHB’s local implementation costs up to 30 September 2018 were $2.75 million and the cost to Canterbury and West Coast DHBs, which had a combined implementation, was $3.25 million as of November 2018.

Waikato DHB says its approved budget for the project is $3.30 million, which includes go-live and six months post go-live, which the DHB is on track to spend.

Further work on the system was suspended in September while government officials reviewed a plan to develop a business case by NZHP.

An NZHP spokesperson says that apart from ongoing support for the four DHBs that are live with NOS, the project remains “paused” until decisions have been made on the new business case. Decisions are expected in the first half of 2019.  

“NZ Health Partnerships, has been working closely with the Ministry of Health, DHBs, Pharmac and other central agencies to develop the new business case which will be sent to the Government once it is complete,” the spokesperson said. 

Waikato DHB says an expected benefit of implementing the national solution is that it will enable the organisation to adopt the national catalogue.

“This will support national procurement, and Waikato DHB will be able to use national contracts, rationalise the number of items we purchase and get the benefit of procuring more cost effectively,” a response says.

Also, the national system includes functionality not currently implemented and, over time, the DHB will expand its use of the system, including procurement and reporting functionality.

A recently published Ministry of Health Annual Report answers some specific questions on NOS and says that the Ministry has paid Deloitte (or Deloitte-related entities) $200,000 for services associated with the programme over the past financial year.

Return to eHealthNews.nz home page