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Public health sector braces for bill shock as all-of-government Microsoft negotiations loom

DHBs will be prominently represented in the G2018 round of software licensing negotiations.
  • Rob O'Neill (New Zealand Reseller News)
  • 12 March, 2018 09:30
Having been sheltered from cost increases since 2012, DHBs are bracing for bill shock

Having been sheltered from cost increases since 2012, DHBs are bracing for bill shock

District Health Boards are bracing for bill shock ahead of a new round of all-of-government software licensing negotiations with Microsoft.

New Zealand Health Partnerships says it is estimated that the tech giant will seek to increase the price of its software to the health sector by at least 25 per cent, or $11 million over the three year term of the contract.

"The increase will be less for other government agencies as the health sector has retained 2012 pricing for a six year period, while other agencies have seen a number of increases, starting in 2015," the organisation says in a member newsletter.

"Simply put, health has maintained lower prices for longer so the ‘hit’ may be bigger in percentage terms this year."

NZ Health Partnerships, which works to produce financial efficiencies for DHBs, says current health sector spend with Microsoft is estimated to be $15 million a year, or $45 million over the standard three-year contract term. This represents approximately 30 per cent of total government spend on Microsoft.

The Department of Internal Affairs has been seeking agency input to the negotiations, dubbed G2018, from a technical advisory group and a client advisory group.

However, given the significance of the health sector spend and its specific requirements, the DIA has suggested forming a separate sector reference group, NZ Health Partnerships says.

"The health sector has asked NZ Health Partnerships lead this work," the organisation states. "Specifically, we will aggregate the health sector’s requirements and provide a single point of contact between DHBs and the DIA as well as ensuring a good procurement process and strategy is in place."

As a result, two health sector representatives are participating in the DIA negotiation team.

"To assist with our work in representing DHBs’ collective interests we are pulling together a governance structure including involvement from four regional CIO leads," the organisation adds.

"NZ Health Partnerships is also pulling together a small project team that makes use of existing DHB expertise."