CSC claims to be making good progress with NHS

CSC has announced in its latest results that it is making “good progress” with the NHS, but there was no mention of an agreement being made over the failed National Programme for IT (NPfIT).

“We made good progress with NHS, [we are] continuing to work with NHS,” said CEO Mike Lawrie, in CSC’s Q1 2013 results to the 29 June conference call to investors.

“During the quarter CSC achieved a key milestone with [iSoft’s] Lorenzo [patient] management software. We delivered this new software to three trusts in the United Kingdom, and as a result of making that milestone, NHS has agreed to pay us for that milestone.

“So that’s very good news as we continue to move forward with NHS.”

Dominique Raviart, analyst at NelsonHall, said that CSC received around $25 million for the contracts with the three trusts. 

Meanwhile, in terms of the NPfIT, Raviart said that CSC is devoting a lot of time to making sure that its offer is acceptable to the NHS and the Cabinet Office, "which is lengthening the process but is likely to make it more successful."

 "The discussions are about what the offerings are going to be, definition of pricing, definition of what is outstanding. The objective is of course that the trusts come to the NHS for approval on their projects, to get the relevant funding. 

"Having said that, the scope of the contract after the MoU is likely to be smaller," said Raviart.

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According to Anthony Miller, analyst at TechMarketView, the NHS contract is now running at breakeven, “but not contributing any cash to the business”.

“Perhaps more so than with Misys, [former Misys boss] Lawrie has his work cut out to turn this business of several halves and a few other bits into a smooth running IT service machine,” said Miller.

“In fact, that’s probably not even possible within CSC’s current construct. So, just as Lawrie ditched Misys’ ill-fated and ill-fitting US healthcare business, surely he’ll be starting to think about which bits of CSC might be ‘surplus to requirements’.”

CSC was lambasted last year by MPs on the Public Accounts Committee (PAC) after it was revealed that the IT services company had only delivered a full patient administration system to just three trusts in nine years. CSC may have to write off the entire £957 million investment it made in the programme.

The deadline for reaching an agreement over the NPfIT has been extended a number of times, with the latest date being 31 August.

Meanwhile, CSC said that it has started the programme to shave $1 billion from its costs, which it hopes to complete over an 18-month period.

It aims to do this by rationalising its IT systems, improving its procurement processes and redundancies.

The company made some 1,140 job cuts in the UK since February, 500 of which were directly a result of the failed £12.7 billion NPfIT.