Part 1: Introduction
1.1
In September 2015, Waikato District Health Board (Waikato DHB) entered into a two-year contract with a company based in California, HealthTap Inc (HealthTap), to provide information technology services (the HealthTap platform) to support Waikato DHB's delivery of what became known as its "SmartHealth service".
1.2
The SmartHealth service enabled patients and clinicians to access and deliver healthcare "virtually" rather than in face-to-face consultations. The HealthTap platform behind the SmartHealth service offered a range of modules and services (such as video technology, messaging facilities, appointment scheduling, and health records). It was available as a web-based service and as a downloadable application (an app) for cell phones.
1.3
As part of our annual audit of Waikato DHB for 2016/17, our appointed auditor identified several concerns with the procurement of the HealthTap platform. Those concerns included the lack of an open market procurement process, compliance with the Government Rules of Sourcing (the Rules), and an inability on the part of Waikato DHB to demonstrate value for money.
1.4
In November 2017, the State Services Commissioner wrote to us asking us to investigate the procurement process Waikato DHB followed with HealthTap. He made this request because of concerns about the procurement that had arisen in the context of an investigation the State Services Commission was carrying out at that time into expenses claimed by Waikato DHB's former Chief Executive (the Chief Executive). The Chief Executive was closely involved in the procurement of the HealthTap platform.
1.5
In December 2017, we decided to carry out an inquiry into Waikato DHB's procurement of the HealthTap platform.
How we carried out this work
What we looked at
1.6
In our terms of reference, we said that we would examine:
- Waikato DHB's procurement of information technology services from HealthTap to deliver the SmartHealth service;
- Waikato DHB's management of the contract entered into with HealthTap; and
- any other related matters that we considered it desirable to report on.
1.7
In February 2018, after our inquiry was already under way, Waikato DHB decided to commission its own investigation into the SmartHealth service. It engaged the professional services firm Ernst & Young (EY) to provide an independent assessment of the "functionality, implementation, costs and benefits of the technology platform HealthTap, in the context of its SmartHealth initiative". Waikato DHB made that report public in May 2018.
1.8
EY's report covers some of the ground we intended to cover as part of our inquiry. Therefore, we decided to focus our inquiry on the sourcing phase of the procurement process, rather than on contract implementation.
1.9
For the sake of completeness, we have included a summary of some aspects of EY's report in Part 8. However, EY noted in its report that the Chief Executive was not among the stakeholders interviewed for its work.1 The Chief Executive told us that there are aspects of the EY report that he does not agree with.
What we did
1.10
We reviewed more than 7000 documents Waikato DHB provided to us.
1.11
We spoke with several current and former DHB staff who were involved in the procurement or implementation of the HealthTap platform, including the Chief Executive at the time of the procurement. We also spoke with several current and former Board members.
1.12
HealthTap and the Chair of the Waikato DHB Board at the time of the procurement provided responses to written questions that we submitted to them.
1.13
We talked to several people from other organisations Waikato DHB interacted with during the implementation of the SmartHealth service, including from the Ministry of Health and two health organisations in the Waikato region. We also reviewed documents provided by those organisations and the work our appointed auditor carried out on the procurement as part of the annual audit work.
What we did not do
1.14
As well as our normal audit work and our inquiry, there have been other investigations or reviews of Waikato DHB. We have been mindful not to duplicate that work or consider the issues they have covered.
1.15
As already mentioned:
- The State Services Commissioner has investigated expenditure and other matters related to the Chief Executive during his time with Waikato DHB. A report on that investigation was issued in March 2018. The State Services Commissioner's investigation did not look the procurement of the HealthTap platform. Similarly, we have not considered any of the related travel or other expenses that investigation might have been covered.
- We have not duplicated the work carried out by EY during its review.
1.16
The Serious Fraud Office also carried out an investigation relating to the Chief Executive at the same time as we were performing our inquiry. The Serious Fraud Office announced the closure of its investigation on 4 July 2019.
The timing of this report
1.17
Our inquiry has taken longer than we anticipated. There are several reasons for this. They include a lack of documentation about some important aspects of the procurement, which meant we had to interview more people to try to fill the gaps in information.
1.18
There were also issues relating to our need to access, use, and share legally privileged information with some interviewees and the legal processes that had to be followed to support that. As part of our inquiry, Waikato DHB gave us access to legally privileged information without any waiver of privilege. We asked Waikato DHB whether it would waive privilege over that information for the purposes of this report. Waikato DHB has decided not to waive privilege, which it is entitled to do. Therefore, we have not included that information.
1.19
Most importantly, we considered it essential to interview the Chief Executive, who was instrumental in initiating and driving the procurement of the HealthTap platform. He was not available for an interview until January 2019, which was more than a year after we began our inquiry work.
How this report is structured
1.20
Part 2 provides information on virtual care, the reasons for Waikato DHB's interest in virtual care, HealthTap, and the HealthTap platform.
1.21
Part 3 explains the context in which DHBs operate and the procurement processes they are required to follow.
1.22
Part 4 describes the initial stage of the procurement process, from the point when HealthTap was first approached to the first draft of a contract.
1.23
Part 5 outlines the advice from DHB staff that was provided about the draft contract and the procurement process.
1.24
Part 6 describes the involvement of the Board up to when it gave in-principle approval to the contract.
1.25
Part 7 describes changes that were made to the contract after that in-principle Board approval and summarises what the final contract said.
1.26
Part 8 describes some aspects of EY's report that we consider relevant to our inquiry.
1.27
Part 9 sets out our views on Waikato DHB's procurement process.
1: Ernst & Young (17 May 2018), Waikato District Health Board Assessment of Implementation of the HealthTap Solution, page ii.