Monday, October 15, 2012

Karen Dearne: Once again, NEHTA manages both a deficit and a surplus

THE National E-Health Transition Authority had an operating deficit of $29 million in the past financial year, but reports a $91m surplus on a grand total of $241m in revenue.

Income almost doubled from $123.6m in the 2010-11 financial year, when NEHTA had recorded a $9m deficit in tandem with a $33m surplus attributed to forward funding.

Its annual financial statements reveal NEHTA received further funding prior to the end of the 2011-12 financial year, allowing the auditor to prepare its statements on a "going concern" basis even though previous Council of Australian Government funding arrangements ran out on June 30.

"Funding was provided to continue the NEHTA work program until June 30, 2014," auditor Grant Thornton says. "NEHTA has set aside cash reserves sufficient to extinguish any remaining liabilities that exist (at that date), should further funding not be provided."

NEHTA is holding $33.4m in revenue received but not yet earned, compared to $10m in unearned revenue and $7m in program payments received but not yet paid a year earlier.

This year, it reports allowances for expenditure not yet incurred totalling $86m, against $25m previously.

These include $5.1m for the design and build of the National Authentication Service for Health ($6.5m in 2010-11); $3.9m for Healthcare Identifier (HI) service costs ($4.8m), and HI implementation support costs of $11.6m ($10.7m).

Additionally, there are new HI program support costs of $9m; $51.7m for vendor and wave site costs associated with the Personally Controlled E-Health Record implementation; PCEHR "demobilisation" costs of $3m plus $1.9m in design and build costs.

NEHTA's directors report that on July 1 this year, "the key components of the (federal Health department's) PCEHR program were successfully delivered".

"During the year, NEHTA has provided for a number of future financial and contractual commitments associated with its existing work program," the financial report says.

"In particular, in June 2012 NEHTA received funding in advance to cover the COAG work program in 2012-13, and funding for continued work on the PCEHR program.

"In addition to this, funds have been received to enhance the HI service and deployment of (former pilot) e-health sites to the PCEHR."

Because NEHTA adheres to Australian Accounting Standards requirements that income be stated upon receipt, the report notes that "had these transactions been accounted for in accordance with their nature and purpose, NEHTA would have shown a deficit for the year".

The directors say NEHTA entered into discussions with NASH contract provider IBM on July 4 over termination of IBM's $23.6m Design and Build contract between the two parties, and an Operating contract between IBM and NEHTA's wholly-owned $2 subsidiary, E-Health Authentication Services (EHAS).

"The parties are currently engaged in confidential and without prejudice discussions regarding (those) matters," the report says.

"EHAS acts as the Certification Authority of the NASH in accordance with (the federal government's) Gatekeeper PKI policy.

"Its primary purpose is to provide, manage, maintain and enhance the infrastructure, software and systems required to support connectivity and interoperability of electronic health information systems across Australia."

Taxpayers tipped $237.35m into NEHTA during the period, courtesy of the joint Commonwealth, state and territory agreement through COAG, well up from $122.4m the previous year.

NEHTA earned another $3.4m in other income, mainly interest payments; at balance date, NEHTA held $178m in cash or short-term bank deposits (up from $44m a year earlier).

Staff costs account for most of the expenditure, with employees and contractors earning a total $63m (compared with $40m in 2010-11), consultants pocketing $59m ($33m) , while administration cost $20m ($15m).

Twelve senior executives earned a combined total of $3.5m ($3.1m), although not all of these people were full-time staff.

The two independent board members, chair David Gonski and director Lynda O'Grady, together earned $131,210 ($128,475) in salary and superannuation benefits.

Meanwhile, NEHTA paid most state governments for the provision of services in relation to various work programs, with Victoria earning $3m, Queensland $2.3m, Western Australia $1.4m, South Australia $1.2m and the Northern Territory $196,000.

In last year's financial report, NEHTA's short-term goals for 2011-12 were focused on "key strategic priorities", including the NASH, clinical terminology and information services, secure message delivery, the national product catalogue, HI service and software compliance, conformance and accreditation.

This year, its stated aims are to "drive national adoption of e-health" in collaboration with consumers, healthcare provider organisations, industry and government.

"In particular, building on the progress achieved to date with the 12 e-health sites, NEHTA will continue to focus on driving take-up and transitioning the sites to national adoption," the report says.

"NEHTA will also further enable the improved continuity and coordination of care; medications management; and the use of diagnostic information to enhance specifications and standards development."

Karen Dearne is a freelance journalist with a special interest in e-health matters (