Defence's e-health budget blowout

Project cost rose to $133.3 million, $110 million higher than original budget

A Department of Defence e-health project ended up costing $110 million more than budgeted and was delivered three years late, according to a new Australian National Audit Office (ANAO) report.

In May 2009, the Department of Defence finalised a business case to deliver a health records management system for ADF personnel. The proposed system was originally called the Joint eHealth Data and Information System (JeHDI) and was later known as the Defence eHealth System (DeHS).

“The business case noted that the proposed system would centralise, electronically capture and manage ADF health records, and seamlessly link health data for ADF personnel,” states the report.

In February 2010, Defence approached the market for tenders. CSC Australia was awarded the contract to implement a product sourced from Egton Medical Information Systems, a UK firm. The offering was known as the Primary Care System (EMIS PCS) an eHealth system used by the UK Ministry of Defence.

Initially, the DeHS project was going to cost $23.3 million. However, in January 2011, the Department of Finance and Deregulation agreed to total project costs of $85.9 million. This included $54.6 million for acquisition costs and $31.3 million for sustainment costs.

In February 2014, Defence obtained approval from the National Security Committee of Cabinet to increase the DeHS budget by a further $47.4 million to address capability shortfalls, including the purchase of additional software licences and to fund training requirements.

“The total DeHS project cost rose to $133.3 million, some $110.0 million higher than the original budget. At each approval stage, the project has been funded internally using Defence’s departmental budget, and Defence did not request supplementary funding from government. Nevertheless, there is an opportunity cost associated with Defence allocating significant additional funds to the project,” states the report.

The ANAO noted that Defence planned to develop DeHS by December 2011 but did not complete the rollout until December 2014.

In addition, the audit found that the DeHS project was led by Defence’s Joint Health Command (JHC), which “lacked experience in managing ICT-related projects.”

“The contribution of Defence’s Chief Information Officer Group was limited; a weakness in internal project governance and coordination arrangements which introduced substantial additional risk,” said the report.

For example, Defence did not budget for external training requirements or hosting.

However, despite the increased budget and delayed delivery time, the ANAO found that there was acceptance of DeHS by Defence health groups.

The health groups reported better patient care with access to a single patient eHealth record.

However, stakeholders also considered there were issues requiring attention, including system performance, delays in accessing templates and longer clinical consultation periods for several health groups.

“DeHS is a complex system that requires ongoing management to avoid risks to business processes and technical functionality,” the audit concluded.

Defence said that it acknowledged the findings contained in the audit report and agreed with the two recommendations.

Those recommendations were:

• Properly scope, cost and validate ICT project proposals and adhere to approved project management methodologies, ministerial approval and Gateway Review processes.

• Evaluate stakeholders’ use of DeHS and finalise post-implementation planning, including identifying resources and a timetable to implement agreed DeHS functionality.

Follow Hamish Barwick on Twitter: @HamishBarwick

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