Lessons from HealthSMART: The era of big health IT projects in Victoria is over


medical technology

news The Victorian Government has published a landmark review into the use of technology in the state’s health ecosystem, finding that its landmark HealthSMART program launched in 2004 had had its benefits, but that the state should devolve most decisions about IT back to individual health units such as hospitals.

As Victoria’s most ambitious health IT project, the HealthSMART effort was initiated under the Bracks Labor government back in 2003 with a pricetag of $323 million and a due date of 2007. In July 2010 it was reported that it had since had another $37 million pumped into it, with the due date gradually extending, and in November 2011 the Victorian Ombudsman reported that the project would cost another $243 million to complete.

The initiative was slated to replace the complex patchwork of e-health records systems used across Victoria’s public health sector with a series of more modern and standardised clinical IT applications, with major contracts having been signed with e-health vendors iSOFT (now part of CSC) and TrakHealth. However, as early as 2008, the Victorian Auditor-General had expressed significant concerns about whether HealthSMART could deliver as a project.

“The original HealthSMART budget, involving health agency co-funding capacity, was not realistic. Lack of certainty across health agencies about costs and funding sources have inevitably led to delays in implementation,” Victorian Auditor-General Des Pearson wrote in a media release in April 2008, following an audit of the project.

In May 2012 Victorian Health Minister David Davis flagged plans to scrap the project. The ABC quoted David as stating that it would now be up to individual hospitals to determine what their IT needs were in future. “We will no longer mandate particular health ICT projects,” he reportedly said. “There will be targeted approaches and we will work with health services in the forthcoming period.”

This week, the State Government published a Ministerial Review of Victoria’s Health Sector ICT, put together from late 2012 by a panel of distinguished figures in the space. The document was handed to the State Government in August and is available online in full. Although Victoria’s State Government has already changed its policy in the area, as Davis indicated last year, the report published this week is significant because it is one of the largest ever reviews into a health ICT ecosystem in Australia’s history.

In general, the review found that the HealthSMART investment had had both positive and negative outcomes.

“ … overall the sector is now better positioned than it would have been otherwise, which was to be expected given the quantum of funds expended. The greatest levels of functionality and usefulness from the HealthSMART program accrued to large, sophisticated metropolitan health service providers, which represent the majority of activity and investment across the system,” the report found.

“The program has not consistently met the needs of smaller, rural or specialist health service providers. Additional functionality is required by many health service providers in order for them to achieve the full benefits of their applications. The fragmented reporting requirements faced by community health organisations have limited the capacity of the sector to take up HealthSMART applications and realise benefits.”

“Overall, the more successful products were those providing corporate functions. By contrast, the clinical application, inherently higher risk and requiring greater workflow adaptation, has yet to achieve the full anticipated benefits.”

In terms of a future approach for the State Government, the report made four main overarching recommendations for future directions.

Firstly, it recommended that Victoria shift from centrally controlled decisions about ICT project design and implementation in the health space and towards “Greater devolution of decision making to health service provider boards, with central role focused on setting directions, support, monitoring and active, prudent scrutiny of major capital projects where required.”

Secondly, it recommended that a statewide health ICT plan, subordinate to the overarching Victorian Health Priorities Framework, be developed. This would incorporate “a complementary approach to national e-health participation and the ongoing development of Victorian health service capability, particularly with respect to electronic medical records”.

The report also recommended that the State Government stop trying to achieve fully integrated health record interoperability — the holy grail of e-health projects, but one that has historically proven impossible to achieve in almost any jurisdiction globally. Instead, the report recommended a focus be placed on “achieving critical business requirements and on improving patient safety”.

And lastly, the report recommended that Victoria stop specifying specific technology products to be used, and start specifying interoperability standards and requirements instead.

In a separate statement, Davis praised the review. “The findings and recommendations are pragmatic, directional in nature, recognise the need to fully realise the current investment in health sector ICT and position the health system for the future, particularly to meet the challenges of moving to e-health,” Davis said.

“The former Labor government’s misguided HealthSMART ‘participation policy’ mandated an inflexible, wasteful and ultimately unsuccessful one-size-fits-all suite of software to Victorian public health service providers, at enormous cost to the Victorian taxpayer.”

Davis said abolition of the participation policy will unshackle Victoria’s health services and permit them to seek their own solutions to improving their patients’ care and safety through the use of electronic medical records. “Health ICT investments to date will be preserved and interoperability between existing and future systems – supported by robust business cases with independent oversight – will be guiding principles. Labor’s incompetent and failed HealthSMART ICT experiment is over,” he said.

Davis said the report’s findings will guide the Victorian Coalition Government’s previously announced $100 million investment over four years into innovation and communications technology.

This report’s findings are expected and quite pragmatic. However, as I wrote when Davis first decided to can HealthSMART, it’s also not as simple as leaving these decisions to individual hospitals:

“It is clear that HealthSMART’s centralised approach was the wrong one. But let me say this in the strongest possible terms: An approach which simply lets every hospital decide how to run its own IT systems is also the wrong one, and represents the opposite end of two bad extremes.

If every Victorian hospital is literally left, over the next half-decade and beyond, completely to its own devices, with no oversight, to implement their own IT systems and upgrades, what will result is a colossal spaghetti mess of gargantuan proportions which will prove a nightmare to untangle when the state eventually seeks (again) to standardise its e-health platforms statewide.

In an organisation as large as Victoria’s Department of Health, you simply cannot leave individual units such as hospitals to their own devices when it comes to IT. This will result in long-term disaster. Hospitals will be unable to share records between each other’s systems. Every time a medical professional of any stripe joins a new hospital, they will need to be trained in new systems — different from their old workplace. Standardised reporting of the whole sector to the upper reaches of government will become a bad joke. And as various hospital-specific IT initiatives fail, there will be no overarching strategy and resources to fall back on.

I say again: It turned out that a completely centralised e-health strategy was not the answer to health IT problems in Victoria’s health public sector. But neither is stepping away from those problems entirely and letting each hospital solve their own problems. That will result in an even greater tragedy down the track — mark my words.”

I think the recommendations of this report mark a small step away from Davis’ hard line on HealthSMART, and towards a necessary middle ground where there will be an overall statewide plan for health ICT, but that individual hospitals and other health units will still have some freedom within that plan. That’s the right path and I support it.


  1. A sadly, badly run project from the get-go. I had a mate working there who looked after their pSeries gear. They ordered in some serious IBM iron and _then_ proceeded to figure out what they wanted to do with it. After finally arriving at a conclusion several months after delivery they found themselves boxed in by the Oracle licensing they had vs what they were actually planning to do with the gear. Reality disconnect for the win! They ended up running a workload on gear that cost $2+million that would have happily flown on a $200k equivalent. He got the hell out after realizing how badly run things were. He could have hung in there and sat on his hands for a pretty good wage but just couldn’t live with doing next to nothing for months on end.

  2. When I was in QH ehealth there was in excess of a $1M + burn rate a week for consultants /resources with no discernable outcome. Indeed some very expensive resources with no decernable deliverables.

    oh and i am sure if you asked everyone they would say they were very busy. but then again one shouldnt confuse activity with outcomes. Payroll hit the press but ehealth spent lots of money with no outcomes too.

    oh and only half of QH ID IT projects at risk?

  3. Yup … see my comments here:


    The most critical thing going forward is for agencies to work out ways to learn what works, and do more of that, and learn what doesn’t, and do less of that. The big(est) problem with these large centralised projects is that they take too long to run through one cycle of organisational learning. As the pace of technology change quickens then so to must the pace at which agencies learn.

  4. Steve –

    You are only partly right. Its really an issue of desire and willingness to learn. That’s the critical element. How many of us have been there seen the mistakes only to be see them be repeated. This is about desire.

    The length of cycle time for these programs/projects with $100-400M funding allocations is lengthy . And once commenced there is vested interest to keep spending the money – I have never seen an IT department kill off an IT project..Once funding has been allocated, spend the money has often been the only KPI in many government environments.

    I am sure many of us have experienced the feeling of the slow train crash and the sense of helplessness. MSP/Prince 2 is as much a part of the problem as the solution as these approaches place process over outcome and simply provide consultants, management and vendors with the cover that they were following process.

  5. Steve
    I agree with the second article. Like so many poorly executed projects we point at the project rather than the plan or financial controls that govern the success of the projects. It must be important to remember that for all the loose talk about infrastructure projects in political circles there is very little commitment to large scale infrastructure projects such as in information technology.
    Projects are often underfunded and poorly supported: that so many fail is not only a function of poor project management but of a lack of clear strategy and poor leadership. Very few politicians understand information technology even fewer departments include Chief Information Officers in their executive teams. This failure to recognise this failure not only in Australia but in many other developed counties (UK, NZ et al) despite the fact that it is arguable that government is about “information” and that the technology is the way it delivers outcomes.
    The solution is perhaps not to knock the programmes (easy) but to identify why successive political regimes are failing to deliver infrastructure that delivers solutions. If that sounds like rail and road we should not be surprised!

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