Capita buys floundering healthcare software firm iSoft

UK outsourcing firm Capita has bought troubled NHS software firm iSoft Business Solutions, ensuring it can deliver delays and problems to the already struggling British healthcare system.

The acquisition will involve Capita handing over £23 million in a cash-free, debt-free deal and taking on much of iSoft’s public sector business, which includes 60 percent of the NHS trusts in England.

Like attracts like, as both companies have suffered bad reputations over the years for poor delivery and involvement in some unscrupulous activities.

iSoft was previously the subject of investigations into its accounting practices, going back as far as 2002. The company secured gagging orders against news outlets reporting on its financial irregularities, but these were lifted when the Financial Services Authority (FSA) began a probe in 2006

In January of this year the FSA brought the company’s founder, as well as three former directors, to court on charges of conspiracy to make misleading statements.

iSoft has also suffered numerous software problems, particularly with its main healthcare product Lorenzo. Singapore’s health service, Singhealth, signed a deal to adopt Lorenzo in 2005, but abandoned its plans after significant delays in delivering the product. 

The NHS, not learning from others’ mistakes, teamed up with iSoft and began rolling out the software at the end of 2009. Several months later various NHS trusts reported delays or deferred deployment of the software until 2011.

Despite this, iSoft made an operating profit of £3.2 million for its financial year ending on June 30 2010, according to a press release we received. What the press office did not reveal is that iSoft’s financial records were far worse than suggested, with a 20 percent drop in revenues recorded and a 90 percent fall in its share prices over 2010, which prompted its CEO, Gary Cohen, to resign at the end of August.

Capita does not have a clean record either. It was fined £3.69 million for failing to provide criminal background checks in a programme for the Criminal Records Bereau (CRB). This failure meant that staff working with children were not properly vetted and the CRB faced immense criticism.

It was also involved in the Individual Learning Accounts scheme, where £97 million of taxpayer’s money went on fraudulent practices such as miss-selling. In 2001, 279 of the 8,500 providers in the UK were investigated over the illegal activity and 30 people were arrested by police. Capita received £37 million for the endeavour, but it was not stated that it engaged in any improper behaviour at the time apart from failing to properly protect against fraud.

*Update As Brian says in the comments, “Capita has bought iSOFT Business Solutions not iSOFT Group Limited as the story suggests. iSOFT Business Solutions is an iSOFT subsidiary that provides financial and purchasing applications and services.” Thanks and apologies from us.