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Software: Healing solutions - Views on News from Equitymaster
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  • Sep 16, 2002

    Software: Healing solutions

    The IT (Information technology) boom in the last decade has had an impact on all the spheres of our lives. IT has changed the way we do business, the way we communicate and more importantly the way we live our lives. Today IT is making inroads in to the basic of all human needs, that of basic healthcare. Recognising the immense potential of this relatively untapped area Indian software companies are lining up to capitalise on the latent opportunity.

    To put the latent opportunities in perspective, a recent IDC (an market research firm) survey has estimated that the global spending on IT by the healthcare industry totaled to US $ 10 bn (Rs 500 bn) in FY01. The good news for the Indian software companies is that North America contributed nearly half of the total spending. Since, the Indian IT industry already have a significant presence in the US markets, they could look at tapping this healthcare IT markets. Further, post the September 11th incident concerns about privacy, security and access to medical records in healthcare have been intensified. The burgeoning need for IT solutions also comes from frenzied research areas like genomics and biotechnology, that is rapidly rendering the existing IT solutions obsolete. The above reasons are being cited as the main drivers for IT spending in the healthcare sector in the US.

    The area that is likely to attract the largest chunk of the IT spend, is the need to conform with the US government’s Health Insurance Portability and Accountability Act (HIPAA), which has been made mandatory for the US healthcare sector. As per the act, all health records have to be computerized as per standards. By establishing standards, HIPAA aims to standardize the electronic transmission of certain administrative transactions and to protect the confidentiality of patient information. By migrating to electronic data interchange, processes will become more efficient and cost effective as compared to paper processing. The potential spending from this segment alone is estimated to be in the region of US $20 bn (Rs 1000 bn). Companies like Wipro, Satyam and Infosys have already established teams that are dedicated to understand the requirements of this market and act on it.

    The Indian software companies mostly have a presence in the area of hospital management systems (HMS). A typical HMS would consist of certain core modules like billing, medical knowledge base, financial auditing, and accounting in addition to add-ons like blood bank info, food and diet charts, and inpatient and outpatient functionalities.

    Wipro has made significant inroads in to the HMS segment. The company has acquired Healthcare Information Systems (HIRepS) Intellectual Properties owned by GE Medical Systems, USA. HIRepS is a comprehensive. ERP Software for hospital management integrating all departments and their various functions within the hospital. The product is installed in over 20 leading hospitals including Apollo group, Fortis Healthcare, Manipal group and Wockhardt in India and Saudi German hospital in the Middle East. TCS, Infosys, Cognizant and Sonata also have a presence this segment. While the larger players like TCS and Infosys have managed to gain inroads in to the international markets, most of the smaller software companies are targeting the growing domestic healthcare market.

    There are fears however that Indian companies due to their lack of domain knowledge could lose out on this opportunity. Vendor reliability is another grey area, which Indian software companies have to face, as data collected in this segment is highly confidential and governed by strict US privacy laws.

    One aspect however seems certain though, the large scale acceptance of IT tools will entail setting up of large IT divisions in healthcare management organizations (HMOs). To further reduce costs, it is very likely that these HMOs will outsource their IT requirements to destinations with cheaper manpower. Gartner, an IT research firm, estimates that 60% of all (HMOs) would likely spend more on external IT support, consulting and outsourcing services than on internal staff. It could be a win win situation for Indian software companies as they can capitalise on the opportunities provided by both the healthcare IT services segment as well as IT outsourcing in this sector.



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