Our management consultancy columnist, Mick James, looks at media coverage of the recent NHS reports and finds that facts are ignored in favour of sensationalism.



Between fact and fiction: The NHS report



US senator Everett Dirksen once said: “A billion here, a billion there, and pretty soon you're talking about real money.” And so it is with the allegedly ever-expanding budget for the NHS Connecting for Health programme.



ITV’s lunchtime news led on it when the National Audit Office’s report came out. They had an infographic which showed the initial cost as £6.2bn quickly crossed out and replaced by £12.4bn and then replaced by an ominous looking £20bn. Minister for Reform Lord Warner was wheeled on but shouted down whenever he tried to say anything.



The impression to the average punter gained was of a damning report on yet another disastrous IT project spiralling out of control to cost the taxpayer billions of extra pounds for no benefit.



And why wouldn’t ITV? Reporting on a report is one of the easiest jobs a journo can do. All the work’s been done for you, all you need is “the simple sword of Cut and the sturdy shield of Paste” and possibly access to the Internet and you’re off.



So using just these techniques, here’s a basic comparison of what the NAO report really says, compared to the press coverage.



Let’s take as a starting point the normally scrupulous Guardian’s “The cost of setting up the vast NHS IT programme is expected to be double the government's original estimate, parliament's spending watchdog said today. But the...projection is likely to be a relief...the cost of the project has previously been predicted to top £20bn.”



Here’s what the NAO report actually says: “...[P]rovision had been made for total spending on the Programme ... of £12.4 billion. The elements comprising this total are £6.2 billion by NHS Connecting for Health on the fixed price contracts...these contracts are being managed within this total.”



So let’s just pause here to note that the cost of the contracts hasn’t doubled. They are “fixed price”. That means the price is fixed. It hasn’t gone up. It won’t go up. It can’t go up. It’s fixed. I’m repeating myself, but the phrase “fixed price” clearly has no resonance with the media. The NAO even adds: “actual expenditure on the contracts has been lower than planned...reflecting...the successful operation of contractual provisions that suppliers will only be paid once services are proven to be delivered and working.”



So...whatever their own costs, the contractors will only ever get the £6.2bn they originally contracted for, and that only when the job is done.



So what about the other $6.2bn, the “overspend”? This as the report makes clear, is not part of the budget committed to the project but the NAO’s projection of ancillary costs covering “...new projects added to the original scope...additional services...central expenditure...by NHS Connecting for Health...the estimated cost of replacing core contracts...expenditure by local NHS organisations, for example on local IT and training and ensuring compliance of local systems with programme delivered systems.”



So, not an “overspend” but a broader view of NHS expenditure related to the project, much of it “not committed expenditure but is based mainly on the forecasts of expenditure made in the investment appraisals carried out at the time of the award of the main LSP contracts.”



Not only were these local costs expected, but the NAO expects that a significant proportion of them will be offset by the programme itself. Having misunderstood what was announced—which was the (fixed!) amount of money that would be paid to contractors, the media cries foul when its mistake is corrected.



So where did the £20bn figure come from? That was, surprisingly, poor old Lord Warner himself. But as the NAO report explains clearly (to anyone who can be bothered to read it) “that was not referring solely to the costs of the Programme but to the total expenditure on NHS IT over ten years.”



But Lord Warner didn’t get a chance to explain this on the telly. Instead he was lectured about how £20bn “200 hospitals” or “two million nurses”-- and all for the small price of the NHS spending nothing at all on IT ever again. Here’s Dr Laurence Buckman of the BMA arguing the same point: "The NHS spends an awful lot of money on things it doesn't need. The cost of the IT programme makes overall NHS deficits look rather tame in comparison. A reigning in of the project could wipe out the deficit."



Leaving doctors and health trusts free to carry on with their own little spending spree. Because, as we all know, IT is a senseless extravagance, like Jimmy Choo shoes, or titanium golf clubs. It couldn’t possibly have any benefits, because otherwise they’d be mentioned in the report and its coverage, wouldn’t they?



True, the NAO issues a caveat: “the main aim (of the programme) is to improve services rather than reduce costs” but does identify “high level benefits” of the programme”. For example: “using the NHS Connecting for Health’s buying power to drive down the prices paid for IT goods and services (and) staff time saved through using the Programme’s services.”



No figure is given for the staff time, but the NHS has already taken Microsoft to the cleaners for £330m and expects to save another £530m by beating up the rest of the IT industry. Then there are patient safety benefits which the NAO says “could be worth many billions over ten years...this estimate includes £2.5 billion as the human value of preventable fatalities from medication errors.”



You read that right: two-and-a half billion pounds worth of dead, or rather not-dead people. Then there’s the £500m on treating those medication errors, and the £430m in resulting negligence claims, a large proportion of which the NAO believes will disappear.



As for that “extra” £6.2bn referred to above, in the case of the LSP (local service provider) contracts, “local savings were expected to offset nearly half the local costs”. In the case of PACS, the picture archiving system for X-rays, local savings were expected “fully to offset the local costs”. The NAO also expects “smaller savings...in other areas” such as £185 million for NHS mail.



Several commentators have criticized the scope and scale of the project. The NAO by contrast notes that “The procurement of the contracts centrally ... is estimated ... to have saved £4.5 billion in terms of the prices paid for goods and services ... competitions for the IT contracts, enabled ... significant price reductions from the eight prime contractors, the difference between their initial and final bids totalling £6.8bn.”



Now there may be a bit of double counting in that, but just on my fingers and thumbs I reckon that Connecting for Health is on track to pretty much pay for itself. So what shall we spend that mythical £20bn on?




All views expressed in this article are those of Mick James and do not necessarily reflect the views of Top-Consultant.com and Consultant-News.com.



Contact Mick with your views or suggestions at: mick.james@top-consultant.com
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