Healthcare IT integrator IBA Technologies has wrested two UK contracts worth $64 million from its pommy competitors, increasing the company's penetration into the European sector.
The deal follows a successful tender by IBA to manage services for the South Manchester University National Health Service (NHS) Trust and the Kettering NHS Trust. Both contracts run for a period of 11 years.
In addition, IBA has been nominated alongside EDS, French group Sema and McKesson HBOC as approved suppliers of IT services to the South West Electronic Patient Record (EPR) Collaboration procurement. The EPR procurement includes 29 NHS Trusts in South-West England and represents a combined value of over $540 million. Under the terms of the consortium, any of the 29 NHS Trusts can contract with a member of the panel. IBA will supply managed services in collaboration with large-scale data processor Hyder Services, as well as being a systems supplier in its own right.
It is hoped the recent wins will add wind to IBA's waning sales. The company raised $50 million for its ASX listing in March last year. After floating at a share price of close to $2, its value dropped as low as $0.33 in November and has failed to recover. The company was forced to downgrade its 2000 revenue forecast by 20 per cent last July due to contract deferrals. IBA shares were buoyed by the announcement of the deals and closed $0.07 higher last week at $0.45.
Gary Cohen, executive chairman of IBA, says the securing of the recent UK contracts "vindicates IBA's strategic decision some months ago to pursue more potentially lucrative long-term objectives at the expense of short-term gains".
"This, combined with other Private Finance Initiatives (PFI) in the UK health system, is expected to lead to substantial recurring revenue over an extended period," he says.
Meanwhile, IBA is in the process of acquiring the Patient Management Systems (PMS) business of Hyder Business Services for $135,000, down from the original valuation of $1.6 million. Cohen believes the move will enable IBA to pursue larger health outsourcing opportunities in the UK and Europe. However, it will mean that IBA's up-front licensing fee will now be paid out across the term of the contract, a move Cohen feels will add stability to the company's business model.
IBA's existing contracts work on a high security application service provider (ASP)-type model using large-scale data centres, but the integrator plans to move towards an Internet-enabled ASP for the new contracts, whereby applications and ongoing system management will be provided via the Internet or a private Intranet. With healthcare in the UK moving towards treatment through outpatient clinics, Cohen feels the new methodology is more practical. IBA owns 50 per cent of the private hospital market in Australia.
Photograph: IBA executive chairman Gary Cohen.