Healthcare has always been a sensitive area, with ideas of inclusive growth, better patient care, expensive diagnostic equipment and wider delivery mechanisms taking precedence over investment in technology. But today’s hospitals are slowly realizing that IT can be a powerful enabler of all this and more. Read on to find out how the healthcare space in India is inoculating itself for the future.
Healthcare in India: of woes and cures
The Indian healthcare market is growing. It is expected to be worth around $ 40 billion by 2012 (Source: PwC), with nearly 50% of the market being accounted for by the hospital segment.
Dr. Ashish Dhawad, Founder-CEO of Medsynaptic Pvt. Ltd. reveals: “The fact remains that there is a huge gap between the existing healthcare delivery system and the actual requirement of the population for such services.” This demand for healthcare services should itself lead to sustained and rapid growth over the next decade, with most of this growth expected to come from the private sector. A number of Indian corporate players, such as the Ambanis, the Hindujas, the Reddys and the Sahara Group are investing in this space and setting up new hospitals with top-end facilities.
A study of the healthcare space in the country today, with respect to private sector hospitals shows that
- around 2-3% of hospitals have more than 200 beds
- around 6-7% have 100-200 beds
- and a good 80% of the hospitals are very small, with less than 30 beds
Mid-tier hospitals, that is, those with less than 200 beds, handle around 70% of cases in the country and offer the highest scope for growth. It is estimated that 500 such new hospitals are added every year. A tier-I city would typically have between 15 -25 hospitals of this size, with revenues of $ 1-2 million.
“PE backed companies are opening up specialized hospital chains of smaller size,” details Dr. Dhawad. “Even existing healthcare groups like Apollo are opening up smaller clinics which require fewer investments and can provide faster returns.”
Hospitals of this size face some typical challenges – they usually lack adequate administrative staff and hence, show glaring weaknesses in the area of hospital administration. Additionally, they suffer from revenue leakage and are not as profitable as they could be.
Nothing which an injection of technology cannot cure!
IT has a critical role to play in transforming not just patient care, but also the way that healthcare is delivered in India. Technology can help healthcare reach a larger portion of the population, while enhancing the efficiency and productivity of healthcare delivery. IT finds application in almost every area of healthcare, from remote diagnosis to patient education to insurance. No matter the size and type of care provider, there will be a demand for Electronic Medical Records (EMRs), electronic prescribing, Hospital Information Systems (HIS), telemedicine, and Picture Archiving and Communications Systems (PACS), among others.
Figure 1: Typical solution lansdcape
IT also has a key role to play in proving better healthcare to rural areas. These regions, with a population of more than 700 million, continue to be deprived of adequate healthcare facilities. A burgeoning area which is truly making a difference to most of the outlying population of India is telemedicine, the remote diagnosis, monitoring and treatment of patients through videoconferencing or the Internet. As telecom costs decrease further, this space is all set to explode. As Mr Maninder Singh Grewal, Managing Director of Religare Technologies Ltd. points out: “Technology will make healthcare accessible and affordable. The phenomenal success of the telecom sector has set the stage for a similar explosion in the healthcare technology sector.” Additionally, major government initiatives like the UID, the state datacenters, and broadband reaching out to over 200,000 panchayats, present a great opportunity for Indian IT.
India has the fastest growing healthcare IT market in Asia, and is expected to be worth more than $254 million by 2012 (Source: SHS). Industry sources estimate that currently, annual IT spending in hospitals in India is approximately $191 million and will touch $1.5 billion by 2020 (Source: Zinnov Management Consulting). A mid-size hospital in India spends between 1 and 1.5% of turnover on IT, while a large hospital spends nearly 2% on the same.
Figure 2: Market size and projections (Source: SHS)
|Reasons for low adoption of IT
• Doctors are not IT savvy; used to manual systems
• Nurses who need to operate the system are not trained adequately
• Nature of the profession is such that it generates a lot of paper documents
• Sector may not want the transparency brought about by IT (majority of hospitals are unorganized or doctor- managed, numerous cash transactions, etc.)
• Vendor market highly fragmented and unsophisticated; have been unable to present the business benefits of implementing IT
• Most existing products have evolved from custom solutions and many have only basic features
• Implementation and post implementation support not sufficient
• Lack of awareness on how IT can plug revenue leakages, improve profitability
• Lack of modular packages
IT spend by hospitals has not been very forthcoming. Across the world, healthcare organizations have been slow adopters of IT and this trend is seen in India as well. Traditionally IT was not seen as a priority in an industry which focuses on curing sickness. A number of experts in the field point out that this mindset is gradually changing with an understanding of how IT can enable healthcare, and “India can quickly leapfrog the initial phases of technology adaptation and move directly into advanced clinical and patient care and health / medical records,” claims Grewal.
From the market perspective, perhaps the healthcare industry is not taking to IT as fast as it should because of a lack of availability of appropriate solutions. While the global market is dominated by players like GE, Cerner, McKesson, Intersystems and CSC, and larger Indian IT services companies like Wipro, NewGen and TCS, the India market is mostly neglected. The healthcare IT vendor landscape here is highly fragmented with small players, no clear leader and no dominant solution. Existing solutions tend to be basic, and hospitals favour custom solutions, which are then tweaked and sold to other customers. How much of an actual need such solutions then address is anyone’s guess.
Booster dose of opportunities
As the healthcare sector becomes more receptive to technology, numerous opportunities will open up for SMEs and new entrants focusing on this space. “SMEs can create a niche for themselves in areas like mobile health, embedded systems, developing low cost advanced devices, interface solutions, medical imaging, telemedicine and cloud based solutions,” advises Dr. Dhawad. Grewal agrees, “Don’t be surprised if you see innovative products and solutions coming out of the stables of SMEs. Smaller vendors, with their niche solutions can often innovate to fulfil a critical need that cannot be addressed by a large vendor who addresses a wider spectrum and focuses more on services.”
SMEs can focus quickly and be more flexible, and new trends like the cloud and mobile are levelling the playing field, allowing smaller companies to compete on an equal footing with their larger peers.
- Enterprise mobility: As smart phones, tablets and BBs become ubiquitous and cheaper, SMEs will be able to build applications for the mobile at lower costs.
- Cloud: The cloud enables a mid-sized company to develop a technology that can address a large audience, without investing upfront in expensive infrastructure. At the same time the cloud can enable smaller units like nursing homes to access and use technology generally available only to large enterprises.
- New distribution channels: The BlackBerry AppWorld, iTunes Store etc. will offer enormous reach and exposure to any IT provider – even the small ones.
But this does not mean that the SMEs are free from challenges. Going forward, they will need to focus on building world-class innovative solutions which can complete with larger MNCs and also allow them to generate revenues globally. Another major challenge will be to build credibility and trust, since in healthcare there is no scope for error and vendors will need to convince healthcare providers that their solution is reliable and trustworthy.
But the future is bright and the potential, immense. The combination of proven Indian IT talent and trustworthy medical and healthcare professionals will give India a clear leadership position. Circumstances and technology are conspiring to give IT in healthcare a boost. Increasing healthcare costs, global economic disruption and the need for healthcare to reach remote areas – all these are pushing the demand for a new order where the best healthcare providers will be those armed with technology.
(This article also appears in Nasscom Emerge-http://emerge.nasscom.in/2011/03/fighting-fit-an-overview-of-the-market-for-healthcare-technology-solutions-in-india/comment-page-1/#comment-80585 )