IBM’s NASH deal gets terminated


news The National E-Health Transition Authority and IBM this afternoon confirmed Big Blue’s $23.6 million contract to build a key component of the Federal Government’s Personally Controlled Electronic Health Record project had been “terminated”, just 18 months after the contract was initially inked. However, it is unclear where culpability lies in the situation.

As part of a $466.7 million investment in the e-health records announced in September 2010 by the Federal Government, the nation’s peak e-health body NEHTA chose IBM in March 2011 to build and manage its new National Authentication Service for Health (NASH) system, which aims at establishing a nationwide secure and authenticated service for both healthcare organisations and personnel that have to exchange e-health information.

At the time, NEHTA chief executive Peter Fleming said NASH would improve healthcare for both professionals and patients. “Our agreement with IBM enables NEHTA to build a system that will give healthcare professionals timely and secure access to appropriate patient information,” he said in a statement. “In turn, the NASH program will take us one step closer to broader healthcare access for all Australians.”

The contract was to allow IBM to manage the delivery of the NASH project, offering its hardware, software and services capabilities which include assistance, security and access management technologies, as well as IT infrastructure management.

IBM Australia and New Zealand managing director Andrew Stevens said at the time that the delivery of the NASH would establish a more patient-centric healthcare system, while improving health outcomes for Australians. “This program will benefit over 600,000 Australian doctors, nurses and allied health providers and accelerate the delivery of smarter healthcare across the entire healthcare system,” he said.

The transition from existing healthcare systems was to have been ensured by the deployment of a software development kit (SDK) to be provided by NEHTA, which the authority said would guarantee transactions are authenticated and audited in accordance with Australian standards. Once functioning, NEHTA said the NASH would deliver clinical terminology, messaging standards, unique health identifiers and would become one of the fundamental building blocks for a national e-health system.

However, this afternoon, following an initial report by Pulse+IT Magazine, which appears to have broken this story first, a NEHTA spokesperson issued a new statement confirming that the NASH design, build and operate contracts with IBM had been “terminated”. “The parties have agreed and continue to undertake discussions on a confidential and without prejudice basis,” the NEHTA spokesperson said. “In accordance with that agreement, NEHTA is not in a position to make any further comment regarding the matter.”

The spokesperson added: “There is an interim NASH developed and being operated now by the Department of Human Services for the PCEHR system. This situation with IBM does not affect consumer access to the eHealth record system in any way, and given the interim NASH solution has been delivered, this does not impact healthcare providers from accessing and uploading eHealth records. There is a second component which will support secure messaging and an announcement on this is expected in the very near future.”

An IBM spokesperson said: “IBM has terminated its agreements with the National E-Health Transition Authority and E-Health Authentication Services Pty Ltd to design, build and operate Australia’s National Authentication Service for Health. IBM is unable to comment further as this is an ongoing legal matter.”

The news represents only the latest scandal to hit NEHTA and the PCEHR project over the past several years. For example, when the e-health records platform first went live in July, it was revealed that it had already been hacked during its development.

In another example, in March 2011, NEHTA, which has faced criticism with respect to its communications practices with the public and stakeholders previously, faced a new wave of criticism from a major new e-health lobbying organisation at the time, the Consumer Centres eHealth Coalition, which counts as members groups such as the Australian Privacy Foundation, the Council of Social Service of NSW, the UNSW Cyberspace Law and Policy Centre, the Public Interest Advocacy Centre, Civil Liberties Australia and the Queensland Council of Civil Liberties.

At the time, the CCeHC wrote on its site that despite NEHTA and DOHA holding three workshops to gauge consumer views on the issue, there had not been enough transparency and scrutiny on the PCEHR project. Since it went live, the project is believed to have been largely ignored by the public, which has so far showed little interest in participating in the project.

The news also comes as IBM has been sharply criticised by another Australian government – the Queensland State Government – for what the state has seen as IBM’s role in the failed payroll systems overhaul project at Queensland Health. IBM had written to the new LNP Queensland Government claiming it “successfully delivered” against milestones agreed with the previous Labor administration with respect to the disastrous project, which has already cost the state $417 million and will need another $837 million to fix over the next five years. The State is considering legal action towards IBM over the issue.

It’s hard to say what’s really going on here, as I don’t have much knowledge of what’s happening between IBM and NEHTA behind the scenes. However, as someone who’s kept an eye on NEHTA over much of the past decade, I have to say that I don’t have a huge amount of confidence in the organisation or the delivery of the PCEHR in general. NEHTA has suffered a number of communication and delivery problems in the past, and the e-health records area is incredibly complex and notoriously hard to navigate. There have been reports of problems with the PCEHR for months and months now, and I wouldn’t be surprised to hear that the project as a whole is gradually going off the rails.


  1. “However, this afternoon, following an initial report by iTNews, which appears to have broken this story first”

    Hi Renai,
    No big deal but if credit is to be allocated, it probably should go to Kate from Pulse+IT, who was out in front a day before the other guy on this one.

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