Call for SFO to reopen Nigel Murray spending inquiry after Auditor-General slates HealthTap purchase

The SmartHealth hub at Waikato Hospital in late 2016. The online doctor app that cost taxpayers $26 million was axed after its two-year trial. Photo / Natalie Akoorie

Former Labour MP Sue Moroney has called on the Serious Fraud Office to reopen its investigation into the spending of Dr Nigel Murray in light of an Auditor-General's inquiry into the purchase of an online doctor app.

The ex-Waikato District Health Board chief executive, together with former board chairman Bob Simcock, has been criticised over the flawed procurement of HealthTap in 2015, in an report released today by the Auditor-General.

It comes as Simcock told the Herald he was comfortable with his role in the saga that cost taxpayers $26 million.

Moroney said the Auditor-General's report, tabled in Parliament this afternoon, raised more questions than it answered.

The inquiry found the procurement lacked planning, clarity and oversight, was rushed, and the DHB ignored national rules in place to protect public money to usher in the untested United States-based platform.

Dr Nigel Murray was not home and his lawyer did not respond to questions from the Herald over the findings of the Auditor-General's inquiry into the procurement of HealthTap. Photo / Christine Cornege

The SmartHealth virtual care app was an abysmal failure and was eventually canned by a new board after the project failed to reach targets at the end of a two-year contract.

"The rules and procedures ignored by Waikato DHB in its expensive virtual health experiment are there to protect taxpayers," Moroney said.

"Those procedures weren't followed and we still don't know why the decisions were made in haste without due diligence or other providers being considered.

"Given what we know about Nigel Murray's history of extravagant and unauthorised spending, the Serious Fraud Office needs to re-open its investigation into what went on at the Waikato DHB with his expenses and include the HealthTap debacle in that investigation."

Senior doctors union, Association of Salaried Medical Specialists, executive director Ian Powell called the procurement an "incredible fiasco".

Murray was not at his Hamilton home when the Herald went there today and his lawyer, Calum Cartright at Peter Cullen Law, did not respond to questions.

Simcock said he was "comfortable" with his role in the procurement and denied that it was rushed.

"The procurement from my memory would have gone over probably 18 months."

Bob Simcock says he is comfortable with his role in the procurement of HealthTap for Waikato District Health Board. Photo / Christine Cornege

Simcock first visited HealthTap at its Palo Alto base in California in November 2014. Murray went in mid-March and by April they already had a draft contract.

The board was presented with the virtual care strategy in mid-June and signed off in mid-July, though it's understood two board members, Ewan Wilson and Tania Hodges, voted against it.

When asked about the sidestepping of national rules on procurement Simcock said he was not in a position to provide an informed response today, despite confirming he had read a draft copy of the inquiry report some months ago.

He said staff recommended the project, which was not reflected in the inquiry report.

Instead the report said legal and procurement staff had "serious reservations" after finding out about the negotiations once a draft contract was already in place.

Simcock also said staff failed to report back on how SmartHealth was tracking once in place.

"I'm disappointed in a bunch of things around the management of the HealthTap project which I don't think was adequate."

He denied suggestions the board did not know HealthTap was a start-up, despite at least two board members stating they were not informed.

Simcock said it would be a "tragedy" if the failure of SmartHealth blighted virtual care strategies in New Zealand public health.

Wilson today reiterated his earlier comments that the procurement was "incredibly rushed" and that the business case lacked substance.

"HealthTap the product was just a poor fit for the New Zealand healthcare context. My experience gave me the sense that I just wasn't getting all the information.

"I did everything I could to slow it down. And I certainly required more robust business planning.

"Even after receiving some of that business information, I couldn't bring myself to support it and didn't vote for it."

Health Minister David Clark said there were lessons to be learned for the wider sector from the process Waikato DHB took in securing a virtual care app. Photo / Mark Mitchell

Health Minister David Clark said he had not read the full report yet and wouldn't comment on whether it was the core business of a DHB to try to make money off other DHBs, which the inquiry found.

"Mistakes have been made and it's important that those lessons are learned.

"Clearly procurement processes were not followed as they should have been and there are lessons there for the wider industry."

Clark sacked the board in May this year, but Dave Macpherson - who joined the board with Mary Anne Gill after HealthTap was signed off - said SmartHealth was already in trouble in terms of user numbers by late 2016.

"We questioned management on what was being done to boost participation to the required levels, but reporting to the board was pretty sparse.

"The best thing done by the board while we were on it, regarding HealthTap, was to cancel the contract due to non-performance.

"It's clear from reading the findings in this report, plus the lack of good governance in other matters like oversight of the CEO's expenses and his actual work, and major cost overruns on the Farmers building upgrade, that the board leadership was severely lacking in good practice.

"In my opinion, Nigel Murray and Bob Simcock, the DHB 'leaders' at the time of these activities should be held to account, and have not yet been."

Waikato DHB commissioner Dr Karen Poutasi said the inquiry contained important learnings for the DHB and sector.

"The OAG's findings set out clearly the significant problems with the decisions taken on this procurement, and the way that those driving it set about achieving the procurement of these services."

She said the DHB now had a new approval process for capital spending of public money.

"I want to note this procurement took place outside Waikato DHB's normal processes that were in place at the time, and that once legal and procurement staff became aware of it, they identified the significant problems with the contract and procurement and provided ongoing robust advice to those driving this procurement."

Auditor-General John Ryan said the inquiry findings justified the initial concerns of the State Services Commissioner Peter Hughes, who asked the office to investigate in November 2017.

"...overall, the procurement process Waikato DHB carried out fell well below the standards expected of a public organisation.

"The failure in the procurement process meant that Waikato DHB could not prove that it obtained the best value from public money."

Ministry of Health Director-General Ashley Bloomfield called the report essential reading for all those in control of investment in publicly funded health services, and a strong reminder of the need to follow very clear procurement rules.

"The overall message I will be conveying to DHB chairs and CEOs is to reinforce the Auditor-General's view that good discipline around procurement helps ensure good value for money from our investment in health services – something that all of us quite rightly expect from our publicly funded health services."