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Waikato’s HealthTap procurement fell well below standards

Sunday, 29 September 2019  
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Return to home page editor Rebecca McBeth


Waikato District Health Board’s procurement of HealthTap to provide a two-year trial of virtual care services “fell well below the standards expected of a public organisation”, a new report says.


The auditor-general has released the findings of its inquiry into Waikato DHB’s decision in 2015 to contract with US start-up company HealthTap to provide an online doctor service called SmartHealth.


SmartHealth included a free out-of-hours online doctor service, plus online outpatient consultations with a hospital specialist, both provided on patients’ mobile phones and smart devices.


The DHB paid around $16 million in licence fees to HealthTap over two years to trial the virtual care service. Overall, the DHB spent more than $25 million on the project.


However, only about 3100 consultations were done via the service and it did not result in fewer attendances at the hospital’s emergency department.


The high cost and lack of uptake meant SmartHealth was cancelled from May 2018.


An independent report from EY into SmartHealth released that month revealed a number of problems with the roll-out of the service, which it described as a “poor fit” for New Zealand’s public health system. These included a lack of clinical engagement in the project and interoperability with existing clinical systems.


The auditor-general’s report says the DHB’s procurement of HealthTap fell well below expected standards and it could not prove that it obtained the best value from public money.


The report lists a number of fundamental problems with the process, including that there was no formal planning for the procurement before HealthTap was approached, no documented analysis of the market and what other options might be available and no advice sought from the DHB’s legal or procurement teams until after a draft contract had been prepared.


“Early discussions about a possible agreement with HealthTap appear to have been primarily carried out by the chief executive,” the report says.


The chief executive at the time was Nigel Murray, who resigned in October 2017 in the midst of an investigation into his expenses.


The report says the business case was deficient and the procurement plan was also a problem as the information on market analysis and the chosen procurement approach was “unconvincing”.


Further problems include a lack of collaboration with other parts of the health sector, lack of clarity about what Waikato DHB was trying to achieve and how the associated costs and benefits would be measured and lack of oversight of the project after the contract was signed.


The auditor-general’s report says innovation in the public sector is important, but public organisations must still respect the disciplines of good procurement.


“There are important lessons about a good procurement process that can be learned and applied to other procurements in the public sector – in particular, when seeking to be innovative,” it says.


“Innovative service delivery and good procurement practice are not mutually exclusive.”


Chief executive of industry body NZ Health IT Scott Arrol says the failure of the SmartHealth project was not due to the outright failure of the technology or that the strategic intent was wrong.


However, he says the current situation was avoidable and is disappointing.


“In order to meet current and future demands, the New Zealand health and disability sector must have robust, fully functional virtual healthcare systems in place and we must not let this Waikato DHB situation distract us from achieving this,” he says.


Read Arrol’s full statement to


If you would like to provide feedback on this news story please contact the editor Rebecca McBeth.


Read related articles:

SmartHealth stopped at Waikato DHB
US HealthTap a “poor fit” for New Zealand’s health system

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