Atos Origin has 'stretched too far' in suspended NHS deal

Industry analysts have warned that IT services firm Atos Origin may have overstretched itself with a venture into healthcare service provision, after a £257m five-year deal with the NHS was suspended.

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Industry analysts have warned that IT services firm Atos Origin may have overstretched itself with a venture into healthcare service provision, after a £257m five-year deal with the NHS was suspended.

The contract to supply diagnostic scanning in the north west of England was halted pending a review after 900 patients had to be recalled because of problems with the scans.

The deal, negotiated through the Department of Health, is under review after the patient recall. An NHS clinical audit revealed administrative and technical problems with the scans.

Ovum analyst Samad Masood said there had been “many raised eyebrows amongst analysts, vendors and client organisations” when Atos Origin began targeting outsourced healthcare services as a strategic UK growth market a couple of years ago.

“For us, the main concern was that by providing healthcare services, which are more focused on provision of healthcare resources than IT, Atos Origin is risking stretching itself too far out of its core IT services business,” Masood said.

He added: “This contract suspension might imply that Atos Origin has been unable to deliver to expectations, and could be interpreted as evidence that this concern is valid.”

It was “too early to pass a definitive opinion” on the specific contract and Masood remained open minded about Atos Origin's healthcare strategy in general. All business process outsourcing deals were complex and “most come up against issues such as these, particularly early on in the transition”, he said.

“It would be wrong to conclude that Atos Origin's overall healthcare strategy is flawed based on this one problem. The important thing in this situation is to maintain a strong, proactive and constructive relationship between client and vendor so that the problem can be sorted out to the benefit of both sides.”

But he warned: “If this diagnostics issue gets out of hand it could seriously harm Atos Origin's nascent reputation in the healthcare services market, and potentially affect its reputation in other sectors as well.”

A DoH spokeperson said: "There is a full independent review going on into MRI and ultrasound scanning in the notrh west. We won't allow services to recommence until we're absolutely sure patient safety will not be compromised. We're working with Atos to resolve the current issues."

A spokesperson for the IT services firm said: "Atos Origin, in consultation with the Department of Health and the NHS, has taken the decision to stop accepting referrals for all diagnostic examinations while a full process review takes place. The three parties continue to work together in preparation for service delivery scheduled to commence in the coming months."

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