London Cerner costs now put at £31m

The average cost of Cerner Millennium in London rose to £31m in the latest deal with BT as part of the National Programme for IT in the NHS.

The revelation comes in a note from the Department of Health to the Commons’ public accounts committee, which held a hearing on a National Audit Office investigation into the programme in May.

The NAO estimated that contract renegotiations with BT as the local service provider for the capital had “resulted in an increase in the average cost of Millennium per acute trust by at least 18%”.

However, the new figures from the DH show an actual increase of almost 94% from the original contract, under which the average cost would have been £16m.

The latest negotiation, concluded in March 2010, reduced the number of trusts set to get Millennium from 32 to 15 while making some other changes, but the overall contract value only reduced by £73m.

This DH figures make Millennium in London 24% more expensive than Millennium at a ‘greenfield’ site in the South.

Its note says the three ‘greenfield’ sites due to receive Millennium as part of another deal with BT in March 2010 will come in at an average of £23.6m – although the note also complains that “taking an average is a crude comparison as all trusts are different.”

The NAO had estimated that Millennium in the South was 47% more expensive than in London; leading to bad tempered exchanges at the PAC hearing between committee members and DH officials, who said the watchdog had not compared like with like.

The note says the NAO’s comparison was based on London’s CCN2 negotiations in May 2007, when it should have been based on CCN3, concluded in March 2010, because of the “significant” evolution of the product between these dates.

It puts its own estimate of the difference in cost down to the London sites receiving optional and additional functionality that would be charged for additionally under the greenfield contract.

The DH note also addresses another row over costing. MP Richard Bacon, who has been a long-term critic of the programme, and who triggered the latest NAO investigation into it, told the PAC hearing that BT was receiving about £9m per RiO in the South, even though it could be bought from supplier CSE Healthcare for between £1m and £2m.

BT’s Patrick O’Connell said the two figures did not compare like with like, since BT was providing a managed service, with disaster recovery and other benefits.

The DH note says these also include Spine connectivity, additional releases, and “the ability to influence the functionality of the product” and it puts their value at £2m per site over two years.

However, it also gives some other figures for RiO deployments that suggest trusts who receive RiO from NPfIT are paying towards the top end of what other trusts have paid.

For example, it puts the total cost of RiO to Bradford District Care Trust as £1.2m, the cost to Nottinghamshire Healthcare NHS Trust as £2.94m and the cost to “trusts provided by NPfIT” as £2.8m – again with notes warning that different trusts use different functionality and have deployed the product in different ways.