Analysts expect the NHS to stop spending money on IT in 2011; unless it can show that technology will provide a return on investment or efficiency gains in a matter of months.

Tola Sargeant, research director at TechMarketView, forecast “a much tougher year for NHS IT overall" and said that she expected the market to contract by around 7% in 2011 and 4% in 2012 before returning to growth.

Last year, the market for software and IT services was £1.48 billion. This declined to £1.38 billion in 2010 and will drop to £1.33 billion in 2011.

Jonathan Edwards, research vice president, healthcare providers, Gartner, agreed there would be a contraction as a result of tighter public spending and the government’s determination to push ahead with a major reorgaisation of the NHS.

“The reorganisation, combined with the growing squeeze on finances, will slow down investment in IT generally," he told E-Health Insider, which asked a number of policy makers and analysts for their predictions for 2011.

Many of those approached felt a significant number of trusts would use the money they had to implement portals to bring disparate information together for their clinicians.

Only a few trusts are likely to deploy electronic patient record systems in the new climate. However, Edwards argued that those trusts that need to move in this direction are likely to move quickly, while they still have money left.

This could mean that the Department of Health will struggle to meet the quotas needed to ‘fully honour’  the local service provider contracts signed under the National Programme for IT in the NHS.

Despite their gloomy forecasts, experts recognised that IT will be needed to support some of the changes outlined in the government’s white paper ‘Equity and excellence: Liberating the NHS.’ 

This emphasises local action, the need to share data more widely, and the need to find efficiency savings. These imperatives may make it a good year for mid-sized suppliers, with products to fill particular niches.

John Cruickshank of also argued that it may also be a good year for telehealth suppliers.

Cruickshank said: “There should be no more announcements about yet another NHS telehealth pilot! Rather we want to see some determined action toward propelling health into mainstream care-with government addressing the reimbursement and governance blockages.”