The National Health Service will this month make an ambitious attempt to hack through the red tape surrounding hospital computer contracts.

In what will be the largest-ever hospital IT deal, 23 West Country hospital trusts will work together to buy electronic records systems for patients in a contract likely to be worth well over £100 million.

The invitation to suppliers to bid for the contract will be billed as a 'market test' for a contract signed by EDS in 1995 - a check to confirm that EDS is still the most competitive supplier.

However, the NHS sees the procurement as a test case for a fast-track process for buying IT.

The hospital computer market has been almost frozen for five years because of tough purchasing rules, introduced after a series of NHS computer problems in the early 1990s.

A seven-year IT blueprint announced last year promised a "procurement review". Although the review has not yet been published, the NHS executive says it will involve hospitals working together choosing a small number of approved IT suppliers, rather than allowing each trust to pick its own system.

The NHS would thus save millions of pounds on IT consultancy and legal fees, while the successful suppliers would have an incentive to invest in research and development.

Suppliers are sceptical, however. Smaller firms fear the new rules could squeeze them out of the market and strangle innovation.

"The current draft proposals are highly dangerous," said Markus Bolton, of health IT supplier System C.