Update: U.K.'s NHS outsources back-office financial services

LONDON -- An effort to outsource and computerize some back-office finance and accounting services within the U.K. National Health Service (NHS) will be formally launched on Friday by the Department of Health (DOH) and its corporate partner, Xansa.

NHS Shared Business Services (SBS), a 50-50 joint venture between the DOH and Xansa, an outsourcing and technology company based in Reading, England, will provide such services as accounts payable, debt collection, bank account reconciliation and account reporting, Xansa said.

Oracle is providing the software for financial transaction processing and e-commerce functions. Each participating NHS organization will use a copy of Oracle's Financials 11i software. Oracle, of Redwood Shores, California, was included in the project as part of its existing contract with the NHS.

NHS SBS grew out of the Department of Health's Shared Financial Service Centers in the English cities of Leeds and Bristol, which itself had been established as a pilot project in 2001. At the time the contract was announced last November, the centers provided services to 36 of the 663 NHS organizations and DOH agencies. NHS SBS has since signed up 11 new organizations, for a total of 47 being serviced, Xansa said.

"When the centers were first established, we had a mandate, which was subsequently taken away with the idea of making the system less centralized and the hospital trusts more autonomous," said DOH spokeswoman Annie Taylor. "We realized that we needed additional resources to help market ourselves and to grow, and that's what utilizing private sector experience as part of a joint partnership has provided."

Xansa beat competition from KPMG and Atos Origin, Taylor said.

The partnership between the DOH and Xansa is expected to save over £224 million ($421 million) of NHS money over the next 10 years, according to DOH estimates. Additionally, NHS Trusts contracting to NHS SBS will save at least 20 percent on their current in-house costs, Taylor said.

For the cost savings to be realized, at least half of the 663 NHS organizations need to sign up with NHS SBS, the DOH said.

NHS SBS said it is in discussions with some of the 28 Strategic Health Authorities, which represent around 560 NHS organizations, although a spokeswoman declined to provide any specific numbers or expected timelines. NHS SBS is in talks to provide managed payroll services in addition to finance and accounting services, it said.

NHS SBS hopes to have the managed payroll services added to the venture by April 1, 2006.

About 230 people who had worked at the Shared Financial Service Centers transferred to Xansa. The company has over 6,400 employees in the U.K. and India. Currently, there are no plans to move some of the services to Xansa's India operations, though it remains a future possibility, Taylor said. "We'd need to go through some serious growth before we'd plan for that," she said.

Last November, Xansa estimated the NHS will spend about £1 billion ($1.89 billion) on finance and accounting services over the next 10 years. The joint venture stands to generate revenue of around £500 million over the same initial period, it said.

Copyright © 2005 IDG Communications, Inc.

InfoWorld Technology of the Year Awards 2023. Now open for entries!