Mar 11, 2013

BC governments extends outsourced health information management despite issues raised by Auditor General


British Columbia’s government today announced it had extended its agreement with Maximus BC, a US subsidiary corporation, to manage BC’s health information for another five years. The $264 million contract will run from 2015 until 2020. The original contract began in 2005.  That ten year deal cost $324 million.  On a comparable basis the new five year agrrement has an increase in price of roughly 40 per cent.

The agreement was apparently signed two months before a provincial election and 11 days after a report from BC’s Auditor General that found the benefits promised from the contract in 2004 had not been realized.

The Auditor General’s report did not get a lot of media attention. In light of today’s announcement it is worth going back to the AG’s report.  Here are some of the benefits that were promised at the time the original contract was signed and the Auditor General’s take on the results.

  • Improved Service Levels

While the Auditor General reported he could find no evidence service levels were not being met, he was unable to say if service levels had improved.  Baseline data for the previous system didn’t exist and the Ministry has not been obtaining “the required level of assurance over the accuracy of the data…”

  • Transformation of Legacy Systems

At the start of the contract the Ministry promised three major legacy systems would be replaced by 2006 (Call Centre, MSP Claims and Registration and Premium Billing).  The AG reports only the call centre technology was replaced on schedule.  The MSP claims system was six years late. The R and PB system has only been partially replaced.  No penalties were applied for failure to meet deadlines.

  • Information Technology Currency

This involved keeping hardware up-to-date.  The Auditor General said he was unable to determine if currency requirements had been met. He did say, however, that “Desktop and laptop computers were not replaced until five years after handover, even though the contract requires them to be replaced every three years.”

  • Privacy and Security of Personal Information

This was one of the big issues at the time the initial contract was signed. There were concerns that using the subsidiary of an American company would make allow American security systems access to the personal information of British Columbians.  The company and the province made promises this would not happen.

The Auditor General found some things had been improved but also identified two important problems.  First, two tools to identify privacy breaches were not implemented.  Instead, the government relies on self reporting of breaches by Maximus.  “This creates a risk that breaches are not being disclosed to the Ministry and resolved appropriately.”  Second, privacy and security audits do not cover subcontractors working for Maximus.  Also, auditing does not “provide assurance that data access and storage are limited to Canada and that the data can be segregated from the service provider’s parent companies.”

I do understand that a government is the government until such time as it is replaced by another government.  They have the legal right to make commitments while they are in power. But is signing a contract worth hundreds of millions of dollars two months before an election with a company that has shown serious problems the right thing to do?

A possible new government might be able to get out of the contract if it examined it and decided it was the right thing to do.  However, it would probably contravene trade laws and would certainly be expensive. 

A second question.  How can the government justify a 40% increase to manage the system for five years?  The government press release says, ” the company has taken over the operations and information technology, replaced the outdated information systems and transformed business processes and procedures to improve service to the public.”  The heavy, and expensive, lifting is supposed to have been done.

It will be interesting to see over the next two months how many more of these long term deals get signed.

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