The RedAid Health Insurance tender presented a real challenge for
HealthSoft, a software house that specialized in hospital and pharmacy software.
The tender’s main item was an integrative nationwide system for
online handling of fees charged by hospitals for services, by pharmacies for
prescriptions, by physicians for clinic visits and by medical laboratories for
tests. The tender also included a comprehensive patient’s personal health
information service to be made available through the Internet. The customer’s
Management Information System (MIS) Department was to develop
the home office modules, based on the existing software. In addition, the
MIS Department will purchase and install the hardware and communication
equipment according to the contractor’s specifications, see to the computerized
interfacing agreements required with RedAid’s suppliers of health
services, and instruct RedAid personnel in the new system’s operation. All
the systems were to be under tight security, with high reliability requisite for
all the components. The system was to become fully operative not later than
13 months after signing the contract, with the contractor fully responsible
for the quality and timely completion of all system parts.
Already at the beginning of preparing the RedAid tender proposal, the
HealthSoft tender team realized that they needed the professional support of
companies that specialize in software security and data communication. The
size of the anticipated programming load led the team to decide that a subcontractor
would carry out 60%–70% of the programming load. Cape-Code,
a very small software house located in a nearby suburb, was chosen as the
programming subcontractor on the basis of the lowest price proposed. Some
“breathing space” when preparing the proposal was obtained when the team
discovered that the new enhanced Medal Software’s product Version 5E of the
widely used Medal Version 5, a laboratory accounting software program,
included important new modules. These new modules for online external
authorization of patient credit and for the preparation of monthly accounts
for organizational customers like RedAid suited the tender requirements.
Medal’s developers had stressed the wide variety of their package’s interfacing
capabilities, which were touted as suited to almost any requirements. The
integration of Medal’s 5E version into the proposed software solved one of
the remaining difficulties hampering completion of the proposal and enabled
substantial reduction of development costs. Finally, HealthSoft signed agreements
with all the potential external participants – Lion Securities, Comcom
and Cape-Code, subcontractors for security, communication and programming,
respectively – that framed its responsibility for financial issues as well
as coordination between the various organizations.
The day HealthSoft was announced winner of the tender was one of satisfaction
and joy for the company. Within a few days, all the project teams
were working “at full speed”. Monthly coordination meetings were conducted
regularly. The subcontractors reported satisfactory progress
according to the project schedule. The first signs of alert appeared in the
tenth meeting. Comcom, the communication subcontractor, reported that
some of RedAid’s major suppliers had refused to supply the information
needed for planning the communication equipment to be installed on their
premises as they had not reached an agreement with RedAid on the issue. As
expected, Lion Securities, the security subcontractor, faced similar difficulties.
Both subcontractors declared that even if full cooperation was to be
achieved within a week, a one-month delay in completion of the project was
inevitable. Yet, Cape-Code people continued to express their satisfaction
with the progress of the development tasks they had undertaken. The next
coordination meeting was a special meeting, called after only two weeks, to
discuss the severe delays that had appeared in Cape-Code’s schedule. The
delays had been discovered by a HealthSoft team when it tried to coordinate
a planned integration test. At this late stage, HealthSoft found out that Cape-
Code had subcontracted the development task to another small software
house. It became clear that all the previous calming reports had not been
based on actual information; they were fabrications, meant to satisfy
HealthSoft people (and ensure regular income to Cape-Code).
Integration tests of the Cape-Code modules, begun 10 weeks behind
schedule, identified many more faults – of all kinds – than anticipated.
Correction time required exceeded that planned. About the same time, the
team assigned to integrate the Medal Version 5E software into the system
realized that the enhanced version was not operative for all new modules,
particularly the online external authorization of patients’ credit status. In
addition, the interfacing trials with other system modules failed. Medal
Software assigned a special team to complete the development of the missing
module parts and perform the necessary corrections. Though their efforts
were visible, successful completion of the software integration tests was
accomplished almost 20 weeks behind schedule.
The system test started 19 weeks behind schedule, with the same severity
of quality problems that had been observed at the integration phase.
Finally, about five months late, it became possible to install the hardware
and software equipment in RedAid’s main office and at its suppliers’ sites.
The three-week conversion phase of the project, begun 23 weeks behind
schedule, was, surprisingly, a great success, with no major faults discovered and
immediate repair of all faults that were revealed. However, the implementation
phase was a colossal failure: only one-third of the staff listed for training
actually participated in the instruction courses, and the majority of those
participating displayed insufficient preliminary knowledge of the new systems.
Success with supplier personnel was even lower. Only eight weeks later
could regular operation of the system begin, but with only about half of
RedAid’s suppliers integrated into the new system.
The project, a frustrating one for all who participated, ended with a series
of court claims. RedAid sued HealthSoft, and HealthSoft sued RedAid, Cape-
Code and Medal Software, the developers of the Medal software package.
Lion Securities and Comcom decided not to sue HealthSoft – despite the extra
costs they had incurred following RedAid’s lack of cooperation and the subsequent
obstacles raised to efficient performance of their parts in the project
– in expectation of continuing cooperation with HealthSoft on future projects.
The trials lasted for years. The only consolation was that the new
software, once in operation, was a great success, with many of RedAid’s management
admitting that the system worked well beyond their expectations.
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