India, an underserved health-care market to date, has investors queueing up to pour crores of rupees into expanding private hospitals. The bait: a growing middle class that’s looking for an alternative to a sagging public-hospital system and foreigners travelling to India seeking treatment cheaper than at home.
That’s good news for technology firms, which provide and maintain the information systems in hospitals, given that modern health-care companies rely heavily on software to run their operations.
Software vendors SAP, Oracle and IBM, besides local leaders Tata Consultancy Services and Wipro, are leading a growing pack of information technology providers chasing the lucrative market, estimated by retail consultant Technopak at around $3 billion (Rs13,500 crore) by 2012-13, as India’s top hospital chains ramp up their software and hardware spends to reduce costs, beat competition and boost efficiency.
Mimicking health-care businesses in developed countries, these hospitals are computerizing health records to replace bulky files, enabling access to medical and hospital information through the Internet, and even making X-rays and other images available online.
The health-care IT spending in India is estimated at about Rs400 crore, and is growing at about 40% a year, industry insiders say.
Fuelling the growth are big hospital chains such as Apollo Hospitals, Fortis Healthcare, Max Healthcare and Artemis Health Sciences, which are increasing software and hardware spending, according to consulting firm Frost & Sullivan.
“Corporate hospitals in India are today looking at integrated web-based enterprise-wide solutions that offer interoperability across all their branches,” says Sandeep Sinha, who manages Frost & Sullivan’s health-care practice for South Asia and West Asia.
This is a change from even the recent past. In developed countries, hospitals spend 2-4% of their revenues on IT, while hospitals in India used to budget less than 0.5% of their sales turnover. The tech spending at some larger hospital chains such as New Delhi’s Fortis would be marginally higher at 1-2%. Fortis, which runs 14 hospitals in India, plans to double its spend on software next year.
“We will be creating a centralized database for patient records, billing, employee and accounting data. It is important for health-care portability that a patient is able to seamlessly move from one provider to another, carrying all his medical information with him,” says Manish Gupta, Fortis’ chief information officer.
The benefits of IT investments are compelling, experts say. According to Gurgaon-headquartered Technopak, a 100-bed hospital can decrease its time for discharge of a patient by half—to less than an hour, leading to an increase in revenue by a quarter—by investing 2% of its revenues in hospital information systems.
Global business software leader SAP, which counts Fortis and Apollo among its customers for its solutions in resource management to patient care, is benefiting from an increasing demand from hospitals for packaged solutions. “We see great interest for our solutions from mid-size hospitals,’’ says Nagaraj Bhargava, vice-president of marketing and sales at SAP’s India unit.
Most of India’s privately-run hospitals—expected to more than double to nearly $36 billion in annual revenues by 2012, according to a study consultant Ernst & Young did for business lobbyist Federation of Indian Chambers of Commerce and Industry—are small and mid-sized.
Apollo, which is spending nearly Rs9 crore on IT this year, says it expects to increase this to 2-3% of its revenues in the coming years. The company reported Rs719 crore revenues in the year to March 2006.
Says Apollo’s executive director Sangeeta Reddy of a new software the company is installing: “We can integrate it with our financial package and drug databases we have built. The drug databases will ensure that even if a patient is under medication from four specialists, there is no duplication in prescriptions. This can prevent adverse drug reactions.”
Another Delhi-based hospital chain Max Healthcare, that has collaborated with IBM for its hospital information system since 2005 and has a central database across all its seven hospitals, also plans to increase its spending on IT by up to 30% in the next three years. The spending will be on telemedicine, a picture archival system that stores and retrieves all images generated in radiology tests of a patient, and on software for patient confidentiality.
The rapid expansion of hospitals means that the companies don’t have time to develop applications in house. “The Indian market is dominated by custom-built solutions, and we are trying to gradually move hospitals to packaged solutions,’’ says Srivathsan Aparajithan, head of the health-care business solutions at IBM’s India unit.
IT investments will eventually tie in with the hospitals’ research agenda. Max’s information system, which today allows administrators track patient records, billing details and drug consumption across all seven hospitals, will “feed into research and other systems that assist doctors in decision making” in the future, predicts its chief information officer Amit Kumar.