The Hindu Business Line : Temptingly empty

The US healthcare sector is ripe for automation and it looks like the right time for the Indian IT industry to make room for itself at the table. But will Indian companies manage to break the barriers that have kept them out of the picture?

The table was a large one but the three were all crowded together at one corner of it.

"No room, no room," they cried out when they saw Alice coming.

"There is plenty of room," said Alice, indignantly, and she sat down in a large armchair at one end of the table.

— Alice in Wonderland

SECTIONS of the Indian IT industry are viewing healthcare in the US with interest. A $1.3 to $1.4 trillion industry worldwide, healthcare is the largest expense sector in the US with around 13-14 per cent of GDP going into it. The market is seen as ripe for automation with its strong integration into the insurance and the HIPAA (Health Insurance Accountability and Portability Act) coming into force.

Indian companies predict that it is a potential boom area, likening the mandatory HIPAA regulations to the Y2K opportunity two years ago. In practical terms, however, the sector has not really outsourced much business to India.

The reasons are historical, says Cognizant Technologies. Healthcare providers (doctors, hospitals and clinics) around the world have traditionally been moulded in the "welfare" format. Medicine is not considered a business, and even today, doctors do not like to speak in dollar terms. (It is another matter that healthcare in the US is seen as very much a business, so much so that the treatment that doctors prescribe is determined mainly by the patient's insurance scheme and ability to pay for it).

In short, the cost pressures and margins that drove IT outsourcing in other areas are not major forces at play here. Very simply put, most hospitals and clinics in the US do not have resources to spend on IT, according to MindTree's Ertc Mann, Vice-President, heading the healthcare practice.

IT spending itself in the field has been typically conservative, with an investment of less than 2 per cent going into systems, according to Dr Saji Salam, Consultant, Healthcare and Life Sciences Practice, Cognizant.

Most of the hospitals, clinics and doctors are very local, operating in small geographies. Outsourcing, if it is considered, is more likely to be to a local partner in the US. Offshoring is a totally alien concept and India is a country that is "very far off".

Breaking the ice

"The healthcare sector does not have the global perspective of those, say in the finance industry," explains Massachusetts General Hospital's Dr Sanjay Saini.

MGH has just started converting a pilot project to outsource its radiology reading to Wipro Healthcare in Bangalore into a confirmed order. If other hospitals see MGH doing it, maybe they too will look at outsourcing, Dr Saini opines.

MGH can take advantage of the global delivery model, and save time. The hospital reads around 12,000 films a year and outsourcing to India can double that number to 25,000 films, says Wipro Healthcare. Wipro plans to bring in radiologists from the Manipal Institute to do the remote reading. The company has got around the problem of having professionals who are in constant touch with the latest developments in the area by entering into an arrangement with Manipal. The institute will rotate the doctors who do the reading for Wipro.

HIPAA regulations and its insistence on privacy and the "mission critical" nature of the work have also deterred outsourcing to India. Companies also believe in doing reference checks and this is an area where India does not have much expertise or projects to showcase. As a consequence, there are not many healthcare projects coming India's way.

There are companies such as MindTree which have identified healthcare as a strategic area anyway. MindTree is setting right the lack of domain knowledge by intensively training people to work in the area. Infosys has a healthcare practice and in the last quarter said that it was offering hospital management solutions. TCS has entered the bioinformatics area.

Most of the business outsourcing is happening in the related area — from the insurance side of the business that requires claims settlement, and so on.

It is wrong to think of HIPAA as an entry point into the healthcare sector, according to Cognizant's CEO, Ramkumar. With the dates being pushed back, the urgency to shift to HIPAA standards has eased. Besides, insurance companies, who are more in sync with the requirements of the healthcare industry, are considering getting into IT solutions themselves, he says. All this is eating away the "huge' market that everyone had been talking of. Cognizant, a player in the area for the last two years, is sure that there is no place for newer players. "Whatever work there was, there are people already doing it," the company says.

The healthcare industry is limited to the US.

In the UK, the welfare angle still continues. In India, the level of computerisation is low, but for scattered experiments with telemedicine, smart cards for patients containing their histories and so on.

MT didn't help

Finally, the medical transcription industry in the country did nothing to help the situation. The medical community associates India with the large number of MT players doing low-quality work, says Dr Salam. Most of those who damaged the image are not around today, he says.

The healthcare industry offers the IT industry an opportunity in the care provider sector (solutions for doctors, clinics and hospitals), in the insurance sector (claims processing and settlement) and the pharma sector (brand management, improving delivery, e-prescription solutions).

The opportunity ranges from the low level to process design, says MindTree's N. KrishnaKumar.

"Delivery of healthcare insurance is different from other accounting projects," point out industry sources.

"The way you interact with a doctor is different from the way you interact with a CIO," and there is a need for a strong understanding of terms and concepts, they warn.

Despite all that, the growing population in the US of the aged, with a higher consumption of healthcare, is a large tempting table for the Indian IT industry.

It remains to be seen if like Alice, companies can find room for themselves, or they are forced out.

Questions to ask

Healthcare providers looking at outsourcing should ask themselves these questions, says Dr Salam.

How long has the vendor been in business?

Can the vendor provide end-to-end solutions? (To avoid locating vendors for each component of the solution).

Does the vendor understand the healthcare business? (To be able to understand the client's requirements better).

Is the consultant associated with trade bodies in the healthcare space? (To ensure that the consultant is current on developments in the healthcare space).

How is the vendor organisation geared to coping with uncertainty? (Do they have risk-mitigation plans in case of key professionals leaving the company, or other business concerns).

What is the size of the company in market capitalisation and employee strength? "It makes sense to associate with a company that has the staying power. Size does matter," Dr Salam says.

Does the vendor have the right mix of professionals? Healthcare systems implementation includes regulatory, management, legal, and technology and human resources components. A team with the right mix of domain, business and technology is needed.

Does the consultant have referenceable clients?

Does the vendor have tools that can speed up the implementation process?

Does the organisation have a quality certification?

Does the pricing model provide value for money?

Does the vendor have a HL7 membership? (To avoid having to spend money later on building expensive HL7 interfaces.)

chitphad@thehindu.co.in

Send this article to Friends by E-Mail
Comment on this article to BLFeedback@thehindu.co.in

Stories in this Section
Temptingly empty