Scrapped electronic health records projects could result in international arbitration case

Just a month after the government gave the thumbs down to a costly and inefficient electronic health project, there are indications that it could be facing another international arbitration case over the decision. The minority shareholder in the joint stock company which masterminded the ill-fated project has stated in no uncertain terms that it considers the decision illegal and is ready to take the case to court to defend its interests.

VZP|Photo: Tomáš Adamec, Czech Radio

The ambitious electronic health records project IZIP launched in 2002 cost taxpayers 1.8 billion crowns and ten years on had little to show for it. Critics say the project had two major faults: it was controlled and subsidized by the country’s largest insurer VZP –and thereby only available to its clients – and it failed to motivate doctors to use it properly, resulting in random contributions to the database.

In May of this year the government used its influence with the VZP board of directors to scrap IZIP, despite the fact that it would have to launch and pay for a new project from scratch. With a 51 percent stake in the IZIP company the board of the state-controlled insurer complied with the government’s request. Now the board has received a letter from a Swiss lawyer representing the minority shareholder in Switzerland who remains unknown. According to Czech television, which managed to obtain a copy of the letter, Thomas Ladner a lawyer for Health International says his client considers the decision imprudent and illegal and is ready to take action in defense of his interests.

Photo: Barbora Němcová

The main arguments stipulated in the letter are that VZP did not give the project time to prove itself and show profit and that the board of directors complied with a political decision rather than reaching their own conclusions.

Sona Marková is on the insurance company’s board of directors:

“I fear that the threat of an international arbitration case and possibly further expenditures for VZP are quite real.”

Pavel Horák

The director of the VZP insurance company, Pavel Horák, who criticized the decision from the start and is now trying to buy the rights to the IZIP internet website says he has been maneuvered into an unenviable position.

“My negotiating position would have been much better without this imprudent, hasty decision. Scrapping IZIP in this manner was unnecessary and it was unwise. This is not just about acquiring the internet website IZIP has other assets we are interested in.”

The words are the strongest criticism yet of the health minister’s role in the affair and political analysts note that Mr. Horák may be looking to share the blame should the IZIP affair end badly.