NHS project delay hits iSoft; revenue, earnings to be affected

NHS project delay hits iSoft; revenue, earnings to be affected

	Published : Tue, 31 Jan 2006 20:05 By : Richard Owen Print this Story

LONDON: Delays in the commissioning of the new IT systems in the National Health Service has adversely affected the earnings of hospital software specialist iSoft, which has the contract to set up the system. The announcement Monday of the delays reduced the company's market value by more than 45 per cent and its shares closed at 200 pence, down 160.75 pence.

iSoft, which got the prestigious multi-million-pound contract in 2004 to upgrade the NHS systems, warned Tuesday its revenues from the project could be down to 30 million pounds this year, from an expected 85 million pounds. This will reduce its operating profits by 45 million pounds, with revenues expected to be around 240 million pounds.

The 6.2-billion-pound project aims to offer connectivity facilities to more than 30,000 GPs in England and some 300 hospitals over the next 10 years, and provide patients access to their personal health information.

iSoft is working with Accenture and CSC and is supplying kits such as patient record software to three of the five English regions.

The department of health's agency that is supervising the commissioning of the system, NHS Connecting for Health, said the project is ahead of schedule in some areas and on track in several others. There are some 180,000 registered users for the system. It said the commissioning of some parts of the system is being rescheduled because "suppliers and their subcontractors, including iSoft, have taken longer than anticipated to deliver effective software solutions that interface with national applications. Suppliers do not get paid until they deliver."

Opposition MPs, who have been critical of the project right from the start, called for an investigation into its progress. They said the delay is evidence that the NHS was ill-prepared for the massive IT upgrade.

iSoft, set up within accounting firm KPMG, insists that its software is not at fault. However, the company had faced some setbacks recently. In November last, The NHS Trust at Norfolk and Norwich University Hospitals stopped implementation of an iSoft solution because the system did not meet requirements. Later, in December, NHS Trust at Tees and North-East Yorkshire suspended the switching-on of its iSoft-produced patient records system.