Earlier this week the Department of Health confirmed its intention to re-tender its Electronic Staff Record (ESR) contract. ESR is currently provided by McKesson under a £325m contract originally let in 2001 and now due to expire in August 2015. With McKesson’s UK business up for sale – it hopes to exit the UK IT market before the year-end (see McKesson to exit UK tech) – the chances of a new supplier taking over seem high.
Despite early problems with its rollout, ESR is now seen as one of the NHS’ IT successes: it’s a single workforce management tool for the NHS providing HR & payroll, learning and talent management and workforce information provision. DH is looking for a supplier to transition and operate the existing Oracle-based system (which will become a DH asset) and undertake future enhancements. According to the Prior Information Notice, the contract is valued at £250-£450m so it’s likely to prove an attractive opportunity to suppliers.
ESR is one of a number of a growing number of opportunities in the NHS market. Another high profile tender due later this year is for a replacement to the NHSmail service currently run by Vodafone (Cable & Wireless) under a deal worth around £30m p.a. that comes to an end next June. According to reports on industry newsletter eHealth Insider, NHSmail2 is likely to be procured via a new secure email ‘Lot’ on the Public Services Network (PSN) framework.
We’re seeing an uptick in contract activity in the NHS IT market - and it’s forecast to be one of the higher growth areas of the UK Public Sector SITS market – but these larger deals are relatively few and far between. Generally the trend towards localisation means smaller deals, let by individual healthcare organisations, which are likely to be less attractive to big players. Moreover, much of the contract activity – like both ESR and NHSmail – is the retendering of existing contracts that are not adding new money to the market. And of course with high levels of competition, suppliers will continue to be under pressure to offer ‘more for less’.