Health Minister David Clark suspends troubled Oracle DHB IT project

Health Minister David Clark has pulled the pin, for now, on a DHB IT project that has so far eaten up around $100m. Photo / NZ Herald

Health Minister David Clark has pulled the plug for the time being on a troubled IT project to replace district health boards' ageing systems which has cost more than $100 million so far.

Clark said today that further work on the National Oracle System had been suspended while officials reviewed a plan from the DHBs' Crown subsidiary Health Partnerships for future work on the project.

"I'm expecting advice on this in coming weeks. I'm not in a position at this point to offer a view on the future of the programme," Clark said.

He confirmed that the project had cost more than $100 million to date.

A review of the project was initiated last year after Health Partnerships, which had already racked up more than $90m in costs, asked for another $23m.

That $150,000 review by Deloitte was plagued by accusations of a conflict of interest after it was revealed that it had carried out earlier work for Health Partnerships under its Asparona brand.

Audit New Zealand was then brought into review the Deloitte review.

It found that while there was no conflict of interest over the work by Asparona, there was a potential conflict because Deloitte, in carrying out the review of the project, may be put in a more favourable position for further work for the Ministry of Health on the National Oracle System because of its involvement in the review.

Audit NZ noted that Deloitte had had multiple engagements with Health Partnerships in the past two and half years for which it had earned around $1.2m.

But it noted: "We have no evidence that Deloitte intended to advantage itself in this way and indeed it is unlikely it did have any such intention."

Its report said that no steps were taken to manage the perception of self-interest or the potential for a conflict of interest at company level.

"This was a significant failure in the engagement process," Audit NZ said.

Audit NZ criticised the Ministry of Health on a number of fronts over the process by which it engaged Deloitte, including that records were "almost non-existent" and that Deloitte's substantial disclosures regarding conflict of interest were not fully or properly considered by the ministry.

Clark released both the Deloitte and Audit NZ reports yesterday, saying the former had been "a window into a troubled project".

"The whole point of the review was to salvage a project that was going off the rails.

"When we took office we were deeply concerned about the waste of taxpayer dollars between 2012 and 2017 when $90 million was spent with little to show for it.

"Deloitte's report makes clear that the project was not set up to deliver its expected benefits for DHBs. This underlines that there was an urgent need for the ministry to intervene when it did."

Clark said the ministry had accepted Audit NZ's findings and was addressing them.

National's associate health spokesman Shane Reti said the Audit NZ report showed the Ministry of Health had not properly managed the conflicts of interest.

"David Clark has yet to take responsibility for the fact the review he commissioned and then subsequently tried to bury showed there is 'little evidence' conflicts of interest were considered, and management of the risk of conflicts of interest in the initial report was 'wholly inadequate'," he said.

"The Audit NZ report concludes with five areas where the engagement of Deloitte did not demonstrate good practice and a raft of recommendations. It now comes as no surprise that David Clark played political games and tried to avoid releasing the Audit NZ report."