Delivering HealthSMART - Victoria's whole-of-health
ICT strategy
1 EXECUTIVE SUMMARY
1.1 Introduction
1.1.1 Background
In 2003 the Department of Human Services (DHS) established the
Office of Health Information Systems (OHIS) to deliver the
HealthSMART program. The program was approved by the
Victorian Government to implement Victoria’s Whole-of-health
Information and Communication Technology Strategic Plan
2003-2007.
HealthSMART is currently a six-year, $323 million
technology program operating across the Victorian Public Health
System (VPHS) and due for completion in June 2009. The program is
large and complex, involving health services, rural information and
communication technology (ICT) alliances and community-based health
providers across the state. It is the most far-reaching ICT change
program ever undertaken by the VPHS.
The HealthSMART program was funded by re-allocation of
previously approved DHS funds ($112.0 million), new funds ($138.5
million), and agency contributions (equivalent to $72.9
million).
DHS manages expenditure of the existing and new funds, and
recently allocated a further $34.8 million from its own resources
to the program to meet additional costs related to longer
implementation schedules and decreased agency funding.
The program aims to replace obsolete and unsupported
applications in health care agencies with capable,
industry-standard products. It plans to introduce new systems able
to support the transformation of healthcare. At the same time,
agency ICT infrastructure will be refreshed and
developed.
1.1.2 Scope of the HealthSMART program
HealthSMART aims to improve patient
care, reduce the administrative burden on health care professionals
and ease the costs associated with updating technical
infrastructure within the VPHS by adopting a more standardised
approach to information systems.
Through the HealthSMART program and the strategic use
of ICT DHS aims to:
- improve health care services and outcomes for
the public
- make the provision of health care more
efficient
- manage available resources better
- attract, retain and support a highly skilled
health workforce.
There are five major initiatives associated with the
HealthSMART program. While each focuses on different
functional areas, the interdependencies between these initiatives
are critical to achieving the required outcomes.
The scope of these initiatives includes:
- resource management systems across health
services, rural ICT alliances and major health centres
- patient management systems across health
services, rural ICT alliances, community health, ambulance and
dental services
- clinical systems, supporting access to clinical
services and their results (providing the structure and initial
content of an electronic health record), as well as electronic
medication ordering, across all health services and regional
hospitals
- an appropriate governance and program management
structure to facilitate the implementation of this strategy
- a shared services facility to support the
HealthSMART applications installed across the VPHS.
1.2 Findings from this audit
1.2.1 Achievement against the approved plan
Original milestones were too ambitious
Our review of the program shows that the original milestones for
the program have proven to be too ambitious, requiring OHIS to
periodically revise them as the program proceeds.
Our analysis also indicates that the program will not be
finalised by its planned completion date of June 2009, although DHS
has not yet advised the government of the need to revise the
expected completion date.
Implementation of clinical systems is most at risk
The ICT implementation most at risk is Clinical Systems, the
application with highest potential benefit. It is also not clear
how many agencies are within the scope of the HealthSMART
clinical systems roll-out, requiring DHS to:
- clarify the total number of agencies
implementing the clinical systems project, and
- devise a realistic schedule, with adequate
contingency, to successfully implement the program.
Failure to implement clinical systems is a serious issue for DHS
and the health sector in terms of delivering the expected outputs
and benefits of the HealthSMART program.
Half the budget spent for a quarter of the planned
installations
DHS had spent $184 million of the approved HealthSMART project
budget by December 2007. This is about 57 per cent of the original
$323 million allocation.
There has been significant planning, preparation and procurement
activity and effort undertaken by OHIS. This effort has consumed
$91.3 million or about 50 per cent of the $179 million budget
allocated to implementation of the HealthSMART
applications.
At present, 24 per cent of the planned application installations
are complete, with the shared services environment and supporting
ICT technical infrastructure fully operational.
Implementation delays have led to underspend against
forecasts
Due to delays in the implementation of most of the planned
HealthSMART installations, DHS has continually underspent
its forecast annual budgets for the program.
This situation has caused unspent funds to be carried forward to
subsequent years.
At the current rate of implementation, DHS will not be able to
use all its allocated capital by the current planned program
completion date of June 2009.
No reliable method to estimate agency implementation costs
We found that OHIS does not have a
reliable basis for estimating agency expenses nor does it monitor
agency expenses for the HealthSMART program. Therefore,
there is doubt about the reliability of its cost to completion
forecasts and reporting on sector-wide actual expenditure.
Furthermore, although it is unlikely
that any final accounting of the program will be able to capture
its full cost, it is clear that the additional contribution by DHS
to the program is at least 14 per cent over budget.
Recommendations
DHS should:
- identify the agencies that are expected to
implement clinical systems and devise a realistic schedule, with
adequate contingency, to successfully implement the program.
- work with agencies to define a standard method
to record agency costs related to the HealthSMART
program.
- monitor, in collaboration with health agencies,
agency costs for the HealthSMART program and report them
to the Board of Health Information Systems.
- seek authorisation for the various changes it
has made to system implementation and budget targets within the
HealthSMART program through the defined central agency
amendment processes.
RESPONSE provided by Secretary,
Department of Human Services
Whilst the department acknowledges that
the HealthSMART program is behind its initial schedule,
the program has nevertheless been tightly managed with any changes
to timeline approved by the peak governing body (Board of Health
Information Systems) in a very transparent and accountable
manner.
DHS also believes that funding for the
project has been tightly managed and expects to keep within the
operating cost budget estimate provided within the original budget
case and the project funds provided by government. DHS has
allocated some additional ICT funds available within the DHS base
budget and varied the relative contributions between DHS and health
service contributions but this is in the context of a complex set
of funding and productivity arrangements between DHS and health
services that varied after the original business
case.
The department considers that the
HealthSMART program has delivered significant
benefit. The landscape of health ICT has changed
significantly and positively as agencies have moved to industry
standard products delivered through an enhanced service delivery
model. This change would not have occurred without the
centralised facilitation and coordination that HealthSMART
has provided.
Specific comments on
section 1.2.1 of the Executive Summary
Product selection and configuration has
occurred for all HealthSMART applications; the underpinning
infrastructure has been purchased and installed to support
these.
Seventeen sites have been implemented,
with some sites using multiple HealthSMART products; 10
sites are undertaking implementation activity and 21 sites are
planning implementation activity.
The decision to implement any
HealthSMART application within a participating agency is
made by health service boards based on individual business
cases. The remaining set of decisions on HealthSMART
applications by health service boards is nearing
finalisation.
Government through ERC and OCIO
reporting have been regularly updated on the status of
implementations and any implications for program targets.
DHS agrees with audit recommendations
that implementation schedules should be finalised as soon as
possible and appropriate approvals for any necessary revisions to
time or budget should be sought at that time.
1.2.2 Realisation of
benefits from the program
Strategy is based on a coherent vision
The HealthSMART strategy is
based on a coherent vision which reflects global and national
trends to increase ICT-enabled health service delivery. The
strategy was designed to address immediate issues of obsolescence
and to provide a basis for cost effective service delivery and
improved patient outcomes.
The strategic plan was developed
following stakeholder consultation to ensure that appropriate
priorities were identified across the sector. A steering committee,
composed of senior DHS and health agency representatives, oversaw
its development.
Lack of detailed business case has been a key planning
flaw
The lack of a whole-of-program business
case has been a key flaw in the planning for the program. DHS had
an inadequate baseline analysis or process to demonstrate that the
program would be viable, and would provide value for money, with
benefits from the program exceeding costs.
Due to this deficiency, a number of
implementation issues that could have been forecast or analysed in
a business case have now manifested themselves during the life of
the program. A better business case may have avoided:
- implementation delays caused by procurement
issues
- issues arising from unforeseen technical
complexity and
- funding approval delays by health agency
boards.
Furthermore, due to the absence of a
state-wide clinical systems business case, health agencies and the
state are now having difficulty committing to additional ICT
investment, such as enabling works, which are prerequisite to the
effective implementation of clinical systems.
Some benefits have been realised
Health agencies have been able to
realise benefits from the implementation of the Financial
Management Information Systems (FMIS), Human Resource Management
Systems (HRMS) and Patient and Client Management Systems (PCMS)
applications. Some obsolete systems have been replaced and others
are being replaced. Many agencies have taken up the opportunity to
improve the way they do business.
The FMIS portfolio has substantially
delivered its planned outputs, with 8 of the 11 participating
health agencies successfully implementing the FMIS product. The
remaining 3 agencies are expected to finalise implementation by the
end of April 2008. However, there are considerable delays in
obtaining benefits from the implementation of clinical systems. The
delay in implementing clinical systems is more than a project
management and scheduling issue. Opportunities to realise benefits
and reduce costs have also been delayed.
Budget revision means greater subsidy by DHS
DHS did not have a reliable basis for
estimating ‘whole of life’ costs arising from the program, or for
defining agency contributions.
It also did not seek to identify whether
agencies were able to meet their anticipated contributions.
This means that DHS was in a position
neither to accurately estimate the total cost of ownership of
HealthSMART systems and infrastructure, nor to estimate
what level of contribution should, or could, be made by health
agencies.
Revisions to the program budget were
made in June 2006, resulting in DHS contributing an additional
$35 million. This DHS cost escalation was made in recognition
of the inability of agencies to meet the original DHS expectations
of co-contributions.
No source of sustainable ICT investment for health
agencies
The ability to plan and accommodate
HealthSMART costs is dependent on the viability of
individual health agencies. While some agencies have sufficient
reserves to pay for their share of implementation expenses and
ongoing costs, others have struggled.
Adequate funding of ICT infrastructure
within health agencies is an ongoing challenge within the sector,
as ICT competes for funds with general medical equipment, which is
given priority due to its clinical ‘patient facing’ usage.
If the past patterns of ICT
underinvestment continue, some agencies will not be able to keep
their infrastructure up to date and are at risk of not fully
benefiting from the investments made through the
HealthSMART program.
Delays mean greater subsidy of shared services
Delays in implementation of applications
will mean that the HealthSMART shared services arrangement
will have to be subsidised by an extra $61 million until enough
agencies have implemented HealthSMART applications.
This could divert significant funds from
DHS service delivery budgets and lead to underutilisation of a
strategic whole-of-sector ICT asset.
Recommendations
- DTF and DHS should work with the VPHS
implementing agencies to develop an evidence-based business case,
in line with current better practice guidance, to better assure the
effective delivery of the incomplete components of the HealthSMART
program.
- DHS should adopt a whole-of-life asset
management approach to ICT investment in the VPHS, so that agencies
are able both to address obsolescence and to develop as appropriate
their ICT capabilities and infrastructure with more certainty than
the current funding models allow.
RESPONSE provided by Secretary,
Department of Human Services
DHS acknowledges audit comment that
HealthSMART was a coherent vision and benefits have been
realised from implementations to date.
A business case for the project was
developed and approved by government. Audit believes that a
more detailed business case may have avoided some issues
encountered. The department considers that this conclusion is a
matter of opinion and that a different business case is unlikely to
have prevented the issues raised.
Health Services are almost exclusively
funded by DHS. The break up of DHS and health services
contributions within the existing health budget has been refined
over the life of the project.
The HealthSMART business case
included a forecast of future operating costs for the shared
service. DHS believes that operating costs will be managed within
this original estimate.
DHS agrees with audit recommendations
that business cases should be in line with current best practice
and that a whole of life approach to ICT investment should be
adopted. DHS also believes that current best practice cannot be
applied retrospectively to the original HealthSMART
submission.
RESPONSE provided by Secretary,
Department of Treasury and Finance
DTF understands that DHS is closely
working with VPHS agencies to facilitate the implementation of
incomplete components of the HealthSMART program. DTF will
assist DHS, as required, in the successful completion of the
program.
1.2.3 Program monitoring and review
Adequate governance structures established
In November 2003 the Board of Health
Information Systems (BHIS) was formed to oversee the development
and implementation of the Whole-of-health Information and
Communication Technology Strategic Plan 2003-2007 and
to provide high-level direction for the HealthSMART
program.
BHIS is comprised of senior
representatives from DHS, DTF, primary and community health
agencies, metropolitan health services, and rural and regional
health ICT alliances. The Board has no executive powers, being in
effect an advisory body within the broader governance environment
of DHS.
The Secretary of DHS is the chair of
BHIS and actively participates in decision-making concerning the
HealthSMART program, and reports to the Minister for
Health.
DHS has placed significant emphasis on
the governance and management arrangements for
HealthSMART. The governance structure and the presence of
senior departmental and agency representatives has also enabled
frank and open discussions on risks and deliverables.
Sound program/project management processes in place
Overall program management is sound and
the Program Management Office (PMO) has adequate controls in place
to coordinate their complex program.
The program has sound risk management
processes. There is transparent reporting, monitoring and
accountability for key risks and issues, ensuring that key risks
are openly discussed and addressed.
The procurement selection and evaluation
processes were adequate and while the successful tenderers did not
comply completely with all user requirements, OHIS used effective
processes to ensure that gaps in vendor functionality were
addressed to meet user requirements.
However, OHIS has faced a number of
program challenges such as:
- continuing to have difficulties attracting
skilled and experienced ICT personnel and continuing to rely on
contract staff and secondments from health agencies to fill key
positions
- ensuring that all vendors perform and meet their
contractual requirements. DHS has taken a proactive approach to
managing its vendors and has deferred payments or required vendors
to replace non performing managers.
Lack of required Gateway reviews and internal audit
scrutiny
Although the endorsement of the
HealthSMART funding submission was conditional on the
program undergoing a series of Gateway reviews at key decision
points, only one of the five reviews required in the funding
approval has been conducted to date.
Further, there has not been any internal
audit activity conducted or planned for the program by DHS.
Oversight of the program could be
strengthened if regular independent assurance on the progress of
the program was conducted.
Lack of benefit management studies
Although portfolio charters broadly
describe the benefits to be obtained from a system implementation,
no benefits ‘baselining’ had been done for the FMIS/HRMS or PCMS
applications. Further we were not able to find any evidence of
benefits planning or reviews at the agency level for these
applications.
OHIS has developed a whole-of-program
benefits management plan, however some of the KPIs in that plan are
more akin to measures of activity and output rather than measures
of benefit outcomes.
Recommendations
- DTF and DHS should ensure that the
HealthSMART program and its component portfolio projects
are subject to timely Gateway reviews, consistent with current
policy on high expenditure/high risk projects and programs.
- DHS should ensure regular internal audits of
aspects of the HealthSMART program, given the high levels
of risk and expenditure involved.
- DHS, in collaboration with implementing
agencies, should review the benefits received from the
implementation of the HealthSMART program. This review
should focus on whether:
- the applications and ICT infrastructure are
operating as planned
- benefits are being realised
- ICT systems and infrastructure are providing the
expected functionality, without any negative impacts.
RESPONSE provided by Secretary,
Department of Human Services
DHS believes that the Board of Health
Information Systems, consisting of senior health service, DHS and
central agency staff, is appropriate to govern the
program.
DHS supports audit recommendations to
further strengthen governance and benefits realisation.
RESPONSE provided by Secretary,
Department of Treasury and Finance
DTF notes this recommendation.
Project assurance mechanisms, such as
the Gateway Review Process, help provide strategic assessment of
progress at key project phases, aiding in the successful completion
of high risk projects and programs.
The current status of the HealthSMART
program would dictate whether the conduct of Gateway program
reviews could contribute to a successful completion of the program
or derive lessons learned for future undertakings. DTF will liaise
with DHS to assess the opportunities for future reviews of this
program.