Audit into Queensland's digital hospitals finds cost blowout in $600m project

The report found that the $600 million integrated electronic medical record (ieMR) project has not been proven to provide value for money and is predicted to require another $256 million according to a draft business case from the department.

The project, coordinated by eHealth Queensland which sits within the health department, would provide each patients' medical records in a fully digitised environment for clinicians to access.

Digitising hospitals is designed to reduce costs, lower patient days spent in hospital and improve clinical care.

The audit report comes as eHealth Queensland is under investigation from the Crime and Corruption Commission, and follows the publication of an internal review into a 2017 shutdown of the ieMR system.

That report recommended the contract be amended with Cerner in October 2017.

Health Minister Steven Miles said on Tuesday after the report was handed down that it "backed Queensland's digital hospital program".

"That report confirms what we have been saying that thanks to the ieMR, patients in Queensland are getting better health services, doctors and nurses are going about their work in a safer and higher quality way, and our hospitals are benefiting," he said.

"This Auditor-General's report is a big tick for the ieMR program."

Queensland Health Director-General Michael Walsh said at the request of the Health Minister he had made changes to the ieMR rollout according to the report's recommendations.

"It does make some recommendations that we are implementing such as ensuring that we have a good contract management arrangement with Cerner," he said.

"I've already met with Cerner in relation to the contract management.

"It also identifies that as a multi-year, complex, large digital hospital program rolls out that we should actually ensure we have the right governance in place."

A committee was appointed to oversee the management of the contract with Cerner, including Mr Walsh, chief clinical information officer Dr Keith McNeil, and Dr Richard Ashby, the chief executive of eHealth Queensland.

"That will ensure there is a broad knowledge of the relationship with Cerner, the contractual relationship and any ongoing issues," Mr Miles said.

Dr McNeil was the senior responsible officer overseeing the digital hospital rollout.

The ieMR project, which began in 2011, was provided by US medical technology giant Cerner and was found to have a "sound" business case for creating a digital environment for hospitals.

However, the contract between Cerner and Queensland Health was questioned by the auditor-general in the report.

"The department has limited leverage when negotiating with the vendor when contract extension options are due," the report found.

"This is because the department has not sought alternative ieMR options and shows no indication of doing so.

"As a result, there is no competitive tension placed on the vendor."

But Opposition leader Deb Frecklington accused the Health Minister of a "cover-up" over the rollout.

“We called for the rollout to be halted until the technical issues can be resolved and for Dr Ashby to be stood down while under CCC investigation," she said.

“Neither of those things happened and despite these issues, the program was actually fast-tracked.

“This is despite doctors losing confidence, regular system outages and the head of e-Health Queensland being subject to an ongoing CCC investigation for months.”

Mr Walsh, however, said he gave full support to eHealth Queensland Dr Richard Ashby in light of the Auditor-General's report.

"While the department’s contract with the vendor entitles it to obtain pricing as low as other similarly situated clients, it has not requested this information formally, or performed independent price benchmarking, because it believes the vendor has provided it with the best price," the auditor-general found.

"There is no evidence to indicate that the price the vendor offered at the time of the contract extension in 2017 was still the lowest."

The report warns that the unexpectedly higher costs of the ieMR program could have an impact on other projects in Queensland Health if investments had to be "reprioritised".

A 2016 business case into the ieMR conducted by the department clearly detailed the target scope of the project but the report found, "significantly underestimated what it would cost each Hospital and Health System to implement the ieMR solution."