Legal woes for IBM's e-health contract

IBM's AU$23.6 million contract with the National E-Health Transition Authority (NEHTA) is in tatters, and both sides have brought the lawyers in as the government implements an interim National Authentication Service for Health (NASH) system.

The deal was first signed in 2011 for delivery by June 30, 2012. IBM was tasked to develop a system that would use public key infrastructure and secure tokens, such as smart cards, in order to provide an authenticated service. This is so that healthcare personnel and providers can exchange e-health information, including referrals, prescriptions, and personally controlled electronic health records (PCEHRs).

It was part of the Australian government's AU$466.7 million initial investment in e-health record systems that came online in July this year.

IBM was also asked to develop a software-development kit (SDK), so that providers could integrate their existing healthcare systems in the NASH service.

In Budget Estimates hearings last week, National E-Health Transition Authority CEO Peter Flemming confirmed that the contract has been terminated, and the organisation has implemented an interim solution.

"As you are probably aware, we did terminate the contract with IBM," he said. "We have implemented a NASH solution with DHS [Department of Human Services], which is in operation and rolling out. That is progressing."

IBM said to ZDNet that it had terminated the contract, and that the matter is now with lawyers.

"IBM has terminated its agreements with the National E-Health Transition Authority and E-Health Authentication Services Pty Ltd to design, build, and operate Australia's National Authentication Service for Health. IBM is unable to comment further, as this is an ongoing legal matter," the company said.

In a statement provided earlier this week, NEHTA told ZDNet that "the parties have agreed, and continue to undertake discussions on a confidential and without-prejudice basis," and could not comment further. When questioned on whether IBM intended to take the case to court, NEHTA was unable to provide any further information.

The current interim NASH system appears to lack the secure messaging component that was required by the system. NEHTA said that an announcement around this component of the system is expected "in the very near future."

According to the agency, the fall-out between IBM and NEHTA has no effect on the e-health record system.

"This situation with IBM does not affect consumer access to the e-health record system in any way, and, given the interim NASH solution has been delivered, this does not impact healthcare providers from accessing and uploading e-health records," NEHTA said.

Take-up for the e-health record service has been slow, with just over 13,000 people signed up as of October 17. The government is aiming to have 500,000 people signed up by June 30 next year.