Renewal of NHS PACS and RIS contracts brings fresh market opportunities

19-Sep-2012

Report reveals what NHS trusts are looking for as over 100 contracts come up for grabs

New research predicts the medical digital imaging market will see two waves of activity over the coming years as more than 100 NHS trusts across England look to move away from restrictive national contracts.

Under the now-defunct NHS National Programme for IT , dozens of long-running contracts have been signed since 2004, introducing picture archiving and communications systems (PACS) and radiology information systems (RIS), which collect and distribute X-rays, other digital images and patient details to clinicians.

We should not underestimate the amount of change the NHS went through to put in digital radiology systems in the first place. Now trusts are much better equipped and, in addition, the cost of storing images is falling

Many of those contracts are now coming up for renewal and the research by EHI Intelligence hints that trusts will be much more savvy when choosing next-generation systems.

A report on the research warns this action will force suppliers to come up with more innovative and more competitively-priced solutions moving forward. But it will also provide opportunities for smaller IT suppliers, which were restricted from competing under the national programme.

The report adds: “The roll-out of picture archiving and communications systems was added to the NHS National Programme for IT in 2004 and led to one of its few big successes. However, the national contracts for PACS and radiology information systems and now coming to an end, leading to significant activity in the market.

“EHI Intelligence has carried out in-depth research on PAC and RIS in the NHS acute sector in England, looking at the options trusts are pursuing ahead of the end of the national contracts and what the future is likely to hold for incumbent suppliers and new entrants.

In terms of trends in healthcare procurement, this PACS/RIS replacement programme is one of the first really big market opportunities

“We conclude that, while clear regional differences are emerging, incumbent suppliers will face a major challenge to secure their position. There will be space for trusts to secure more innovation and better value from their suppliers, and for new and smaller vendors to expand their market share.”

When the digital systems were first introduced, England was split into five ‘cluster’ areas, with a local service provider appointed for each, three of which remain.

CSC provides trusts in the North West, West Midlands and Southern clusters with GE Healthcare’s Centricity PACS and Healthcare Software System’s (HSS) CRIS RIS; while Accenture provides the East of England, East Midlands, Yorkshire and the Humber and the North East clusters with Agfa’s Impax PACS and HSS’s CRIS RIS solution. Trusts in London are served by BT with Sectra’s Easy Vision PACS and iSoft/CSC’s RadCentre RIS.

The contracts were set for an initial period of five years, with the possibility of a one-year extension and a two-year transition timeframe. This means they are now coming to an end, with a large number of trusts seeking to replace, and in many cases upgrade, systems.

And, following the Government’s decision to axe the national programme and open up the market to increased competition, individual trusts will be able to choose the supplier that suits their needs as long as they can prove the contract offers value for money.

In an interview with BBH this week, EHI Intelligence’s director of research, Paul Smith, said this activity will put NHS managers in the driving seat, helping to improve capability and, more importantly in the current economic environment, cut back on spend.

He explained: “What is going on at the moment is that individual trusts are subtly redefining the market and doing things in different ways, so they will not necessarily be replacing like for like. They are looking for different approaches and they want better value for money.”

When the original contracts were signed, the move to digital imaging services was a new concept and many of the contracts under the national programme included a high degree of training and change management support. They also required major investment in IT systems and computer technology. In contrast, many of the necessary service and infrastructure improvements have now been carried out, so any new contracts are expected to require less expert input and therefore less financial outlay.

The current wave of activity from trusts looking to get ahead of the game will be followed by trusts that have decided to take a tactical approach over the next two years before looking for new systems

“We should not underestimate the amount of change the NHS went through to put in digital radiology systems in the first place,” said Smith. “Now trusts are much better equipped and, in addition, the cost of storing images is falling.

“If we think about our own personal use of images, 10 years ago you would not have dreamed of taking a picture on your phone and texting it, but now that image quality is better and image storage is cheaper and more advanced, it is a common expectation. It is the same in the medical imaging market. Clients expect more for their money.”

The difference in cost was evident at one trust in the South West, which had earmarked an IT contract at £25m. They spoke to a number of suppliers and in the end signed a contract for £10m. In essence, they got what they needed and wanted for less than half the price they had expected to pay.

Smith said: “This is an indication, not of naivety on the part of the trust, but just how much the market has changed and it will continue to do so.

“In terms of trends in healthcare procurement, this PACS/RIS replacement programme is one of the first really big market opportunities. After the death of the national programme, the Government has stepped back and said to trusts ‘you are on your own’. Trusts have now got to become better at articulating the business needs they have to suppliers.”

There is no doubt that the market will be very competitive and there will be room for smaller players to increase their market share and for new suppliers to enter the market

According to the research, top of this wishlist for NHS trusts is for an end to vendor-specific contracts so that technology can be integrated and data, in particular, retained by a trust should it decide to switch supplier.

Smith explained: “Trusts’ contracts with existing suppliers have created major problems in getting data back and passing it on, and one thing that is very clear it that they are looking for end-of-life contracts. However, it is very hard to articulate this and specify it when a trust is looking to have long-term relationships with suppliers over, say, five years. They are looking for solutions that are supplier agnostic and they are faced with competitive bids from several sources trying to answer that by saying ‘we are the best at doing that’. Trusts and suppliers have got to work together to ensure they get the best solution moving forward.”

While some trusts have already announced their intention to link together to procure systems collaboratively in an effort to take advantage of economies of scale, a number are contracting on an individual basis. In London, where the PACS/RIS contracts were signed two years after the rest of the country, the deals are not up for renewal until June 2014, when the 26 trusts will have to decide whether to club together or go it alone.

The current wave of activity from trusts looking to get ahead of the game will be followed by trusts that have decided to take a tactical approach over the next two years before looking for new systems

The EHI Intelligence report concludes there will be two clear waves of activity in the coming years. It explains: “The current wave of activity from trusts looking to get ahead of the game will be followed by trusts that have decided to take a tactical approach over the next few years before looking for new systems.

“Trusts can either collaborate or tender independently and this research suggests that the majority will choose to collaborate in some form. Smaller trusts will look to work with larger neighbours to save money and to support patient flows.

Sign up for your free email newsletter

“This is likely to drive technological innovation, particularly when it comes to data storage and image sharing. However, trusts will still be looking for major savings on the cost of PACS/RIS delivered through the national programme contracts. There is also no doubt that the market will be very competitive and there will be room for smaller players to increase their market share and for new suppliers to enter the market.”

Companies