Government inaction on on the implementation of a national electronic records system continues to frustrate IT health suppliers.

A lack of cohesion between federal and state governments as well as the private health industry has cast doubts about whether HealthConnect trials, scheduled to start in Tasmania and South Australia on July 1, will go ahead.

The trials could be delayed by as much as six months. Privacy concerns, a lack of funding and ongoing turf wars between states and the federal government continue to stall progress with suppliers forced to endure piecemeal efforts to develop an effective database model for almost a decade.

In May's Federal Budget the government made available $20 million over three years for an electronic health record system, a figure which IBA Health executive chairman Gary Cohen said will only just pay for administration, not innovation.

"In the UK the government has a budget in excess of £5 billion for its electronic health system; Australia isn't spending anywhere near that amount," he said.

"Australia needs a national agenda [to which] everyone subscribes and we are nowhere near that level of co-ordination today." In a bid to overcome inconsistency between states, Prime Minister John Howard this month announced the formation of a group to look at the overlap in health.

Speaking after the Council of Australian Governments meeting in Canberra, Howard said the group would report by December this year.

While database vendor Intersystems has been showcasing its technology to the federal government as a solution for an electronic records system, IBA Health CEO Steve Garrington, believes there is no need for an "all embracing" master record.

Garrington believes a messaging system to assist doctors with the flow of patients may be enough.

"It could be based on a messaging type of system, otherwise what will be delivered will be too big and complicated with a massive amount of partners with differing business interests. There is too much information for just the one system; this [messaging] kind of solution is easy to use, robust and affordable," he said.

Finding a way to protect patient records has also added to the ongoing electronic records system debacle, with debate flaring again this month around proposed changes to the NSW Health Information Sharing Policy.

Under the proposed changes anyone who visits a medical practitioner in NSW will have to "opt out" of a model where health information will be recorded and stored on a state-wide centralized electronic database.

Previously, such information was only recorded on a voluntary basis when the patient agreed to provide their personal data, but patients will soon have to choose to "opt out" of the process. Current privacy legislation has to be changed if a trial project of the new "opt-out" plan begins in October this year in the Hunter region and western NSW.

Australian Privacy Foundation director Anna Johnston said the move to make the trial "opt out" has been done primarily because there was a lack of interest from the public in making what they consider private information readily available.

Johnston added that the changes do little to create either a better health outcome or meet the further needs of a state-wide or national electronic health record (EHR) system.

"The "opt-out" process will violate current NSW health privacy laws which is why the Health Minister, Morris Ieema, has moved to change the laws because the government and health department know the proposal breaches these laws. The second issue is doctor-patient confidentiality - we know some people will not seek medical treatment if they think their health privacy will not be treated adequately as we have a long tradition of preserving anonymity in these services."