Cost of new HSE financial management system not known

The total expected cost for the so far incomplete deployment of a new financial management system for the HSE and other bodies is not yet known, almost ten years after its budget was approved and seven years since its roll out began.

The Comptroller and Auditor General's (C&AG) Report on the Accounts of the Public Services 2023 said €136m has been spent to date on the development and rollout of the system, which was originally budgeted to cost €132m.

A further €40m has been allocated to the project this year, bringing the approved budget to €172m for now.

But according to the report the HSE has said that additional capital funding will be required from 2026 onwards to complete the roll out of the system.

The project was approved in October 2015, but its roll out across the Health Service Executive is now not expected to be complete until the end of next year, with other bodies then to follow.

Since it was set up in 2005, the HSE has sought to develop a fully integrated financial management system (IFMS).

The aim of the IFMS is to replace multiple legacy and procurement systems across the HSE, Tusla and 64 other publicly funded health agencies.

The project was green lit by the Department of Public Expenditure in October 2015, on the basis it would cost €82m in capital costs and €50m in recurrent spending for system support over an 11-year period to 2026.

The roll out was due to begin in 2017 and the aim was that it would be fully operational in the HSE and the other health bodies by 2020.

However, the C&AG's report says the roll out plan has been revised on a number of occasions due to delays.

These include issues with the project mobilisation, the original systems integrator procurement and design challenges, the pandemic, the HSE cyberattack and a change in the systems integrator.

The report details how following the completion of the systems design, at a cost of €5.3m including VAT, and early in the build stage, the HSE and the original systems integrator agreed to terminate the contract late in 2021.

A further €4m was paid to the successor systems integrator to review and validate the previous systems integrator's design to ensure it met the revised IFMS requirements.

In July 2022, following a new tender competition, the HSE entered into a contract with the current systems integrator for €63m and the build and test stage was completed in June 2023.

The report says despite the proximity to the launch date, the HSE decided to "go live" with the IFMS for the first implementation group as planned, in early July 2023.

"The rollout was not without challenges," the report says.

"Limited resources were available to assist staff with the transition to the IFMS and to address issues arising from the extent of changed processes involved," it added.

"Overall, users found that they had insufficient time to familiarise themselves with the system prior to it going live," it stated.

The rollout was further delayed by industrial action between October 2023 and February 2024.

Additional funding of €40m was provided in the health budget for this year to try to accelerate the roll out, bringing the total budget so far to €172m.

The report says the HSE now plans to roll out the system across the rest of the HSE in two phases, with completion expected by the end of next year.

"By the end of 2025, the HSE expects that all of the HSE, covering around 80% of annual health expenditure, will be processed through the IFMS," the report says.

Once the HSE roll out is complete, work on the roll out to other health bodies will commence.

"The costs and funding required for future stages of the project beyond September 2025 will be developed as part of detailed project planning for the future stages, and submitted to programme governance for approval in early 2025," the HSE chief executive said in response to the C&AG.

The report also finds that the 2015 ICT business case presented by the HSE was costed without taking account of VAT, but this was not stated in the business case.

"A wider business case submitted to the Department in 2014, including provision for the IFMS, had stated that VAT was excluded," it says.

"The Department considers that, in approving the cost proposal set out by the HSE in 2015, it had done so on a VAT inclusive basis," it adds.