When bank managers move from one branch to another, they see the same computer screens. When doctors move from one NHS hospital to another, they almost always change IT systems as well. Scarcely any two NHS hospitals run exactly the same combinations of computer software and hardware.

Some people think such local diversity encourages innovation. Others think it's bonkers. Over the past year, the bonkers brigade has been in control. The NHS National Programme for IT, supported by £2.3bn in new funding, is about to place contracts to create a standard set of NHS programs. The new systems will be run by a single contractor appointed in each of five geographical regions of England. (Scotland and Wales run their own IT.)

These new contractors will be in a different league from most of today's IT suppliers, which are now scrambling for survival. Last week, the two largest UK-based healthcare systems firms, Torex and iSoft, announced plans to merge under the iSoft name.

The new firm will have more than 40% of all main hospital systems in the NHS. According to specialist market researcher Silicon Bridge, its nearest rival US-based McKesson has just 14%. (Almost unbelievably, 6.4% of NHS hospital systems were developed by the NHS itself.)

Torex and iSoft said the merged group will "provide the necessary expertise and experience to participate more fully in the £2.3bn NHS modernisation programme". This is true, but it glosses over the fact that the new company, with a market capitalisation of £700m, will still be too small to lead any of the new contracts.

In fact, there is no guarantee that it will get any of the new business at all. iSoft is a member of two out of the 27 consortia "long listed" for the new service contracts, led by EDS and Patni. Torex bid on its own, knowing that it would not be eligible, but to ensure that it would not lose out on any subsequent NHS deals through prime contractors.

iSoft will know its fate pretty quickly: the first of the new contracts, for London and north-east England, are to be placed by the end of October, the following three by the end of the year.

Of course, even if the firm loses out entirely, it will not just disappear. It will still have a business supporting existing software (bits of which are found in 70% of NHS trusts) until - and if - the new service providers decide to replace it.

But both iSoft and Torex were creations of a specific time in NHS history, when large IT firms were deserting a moribund NHS market. iSoft was born as a courageous management buy- out from KPMG's old health systems department; Torex grew by acquiring cottage-industry firms along with the UK business of a large US-based firm, SMS, when it gave up on the NHS.

But now, the big boys are back in town, which ain't big enough for all of them.