Health confronts ghosts of failed govt IT projects in Medicare payments rebuild

Can Health exorcise the ghosts of failed past government IT projects?



There is a graveyard bigger than Rookwood Cemetery filled with the cadavers of failed government IT projects and haunted by the ghosts of scope creep, budget blowouts, frustrating delays and second rate outcomes.

It is a fate the Department of Health (DOH) will be dearly hoping it can avoid as it pushes ahead to completely reimagine its 30-year-old IT payments system, a system which underpins Medicare, aged care and veterans’ payments and the Pharmaceutical Benefits Scheme.

The project is still in its early stages. The Request for Information (RFI) went out in March this year as the government gathers as many ideas as it can from tech companies of varying sizes to design, deliver and integrate its digital payments platform, a project that will have multiple phases over the next five years, while keeping its procurement options open.

Vendors are likely to be salivating at the chance to score a lucrative, long-running contract which has about the highest public profile there is for a federal government IT project, perhaps surpassed only by the Department of Human Services’ $1 billion, seven-year Welfare Payments Infrastructure Transformation (WPIT), due for completion by 2022.

But it will not be easy money. It is not a straight forward task to disentangle the current system, which has over 200 applications and 90 databases and supports more than 600 million payments worth approximately $50 billion every year.

The Health Department cannot afford to slip up because if it does it will do so very publicly. The multi-million dollar transformation is an endeavour that will affect around 99 per cent of Australians who use the digital payments platform in one way or another.

CEO of business management company Holocentric, Bruce Nixon, who has worked with government clients such as the ATO, NSW Transport Management Centre, Sydney Water and IP Australia, says now is the right time to do it, before the labyrinthine system gets even more complicated.

“It’s pretty exciting and it is long overdue. It’s a good time to be doing it with new technology available,” Mr Nixon says.

“It is very difficult to integrate everything into the application so there are more and more layers on top and they become more and more complex and unwieldy.

“There does come a time where it makes sense to overhaul the system and replace it with something more modern that allows changes.”

Time is also limited so DOH has little choice but to act. Gary Sterrenberg, CIO of the Department of Human Services, which manages health payments for DOH, has said in the past that the current system has only about three years left before it is totally cactus.

There is no doubt that DOH needs to get on with it but it needs to do it well. 

Critical to the project’s success, says Mr Nixon, is building expertise and loyalty in-house, rather than shifting the burden and responsibility onto systems integrators, although he says external contractors will be needed and they will bring in fresh ideas.

“You should bet on your own people. Open their knowledge. Bring them into the project as early as possible and keep them involved all the way through,” he says.

“Be upfront about how it’s going to work in the future, the ramifications. It de-risks the project.”

Doing this helps prevent cost overruns and scope creep, as well as skilling up staff, and ensures that the people who know and understand the processes the system is built for are more involved in the project.

It makes it more likely that the system can incorporate any necessary changes to payments further down the track too.

“There are always going to be policy changes and political influences. Transformation is ongoing and it is hard to change if you don’t have in-house skills and knowledge,” Mr Nixon says.

It is the people at the coalface processing payments – not systems integrators – who have this knowledge.

“You need to leverage these skills and engage these staff in the process, rather than relying on systems integrators,” he adds.

Integrating the technical into the operational demands a thorough knowledge of current processes and assessing desirable outcomes, along with building in the flexibility to adjust systems to reflect future changes.

It requires drilling down and looking at how payments are made, defining the tasks workers must do, the rules and obligations they are working under, and thinking about how these integrate into the IT system.

Mr Nixon says it is important to examine what can be done better and the expectations Australians have of the system, for example, of being able to make mobile payments.

“The Department should make sure it takes control of the whole transformation initiative. This is a very complex system that has been around for a long time with a huge amount of transactions that are very important to get right.

“You need to start change management from the early days, not at the end, identify current processes, system capabilities and your future vision.”

He suggests building a model to simulate the processes and how things will work, “sort of like a business GPS”.

Mr Nixon says there are lessons to be learned from other IT disasters, whether from Australia or overseas, cautionary tales worth heeding by governments before they blow billions and incur the wrath of ordinary Australians when the systems they rely upon seize up.

“It’s worth being wary of past failures,” he says.

Probably one of the most spectacular domestic IT failures occurred when Queensland Health set out to replace its ailing payroll system in 2006. When the system eventually went live in 2010 thousands of workers were underpaid, overpaid or not paid at all and Queensland taxpayers were left with a $1.2 billion bill for a project that was initially supposed to be a $6 million contract.

The meltdown was primarily due to the organisation’s failure to clearly set out its business requirements or to spell out how it should be delivered and what outcomes were expected. Unrealistic deadlines exacerbated the sloppy planning.

All this set the scene for massive scope creep and proved to be a headache for contractor IBM, which had to deal with multiple requests for changes.

Another epic fail was the Victorian MyKi public transport smartcard, where costs ballooned to $1.5 billion and dragged on an extra seven years, taking nine years instead of two. The ensuing storm of complaints from the public over charges and refunds only amplified the damage done.

The then Victorian Labor government underestimated the project’s complexity and failed to monitor the contract properly.

DOH will be fervently praying that it does not enter the annals of similarly disastrous IT projects and instead gets it right. 

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