IT Vendors focused on the Healthcare Segment

IT Vendors focused on the Healthcare Segment

The healthcare space is ticking with promise for technology players battling spending cuts by clients.

When was the last time you actually celebrated a fever? Years ago when it helped you escape a dreaded Hindi or Maths test?

For grownups too, health and its associated areas are a cause for celebration in these recession-affected times. Going by the recent Nasscom and McKinsey study titled Perspective 2020: Transform business, transform India, by 2020, 80 per cent of the industry’s incremental growth and 50 per cent of the total opportunity will come from untapped verticals such as the public sector and healthcare.

The economic turmoil has impacted IT spending in key verticals such as banking, financial services and insurance, retail and manufacturing, where customers have delayed or postponed investments on deploying new technology applications. However, the IT budgets in healthcare industry are largely unaffected as service providers continue to invest in newer technologies to meet the rising demand for services, and improve their efficiency while keeping costs under control.

John-David Lovelock, Research Vice-President, Gartner, says in a February 2009 release that “Internal spending, hardware and system integration in the financial sector were particularly hard-hit in 2008 and will continue suffering through 2009. In contrast, healthcare grew at 8.3 per cent worldwide in 2008.”

The slowdown is a reality but in this space new research is being commissioned, recruitments being made and plans set in motion to do even better. In a chat with some key stakeholders, eWorld checks out the scene.

Some Positives:

IT vendors focussed on the healthcare segment continue to see traction as players look to leverage technology to control costs while trying to be efficient. Indian vendors, who earn about 5 per cent of their revenues from the healthcare practice, are bullish about the prospects and continue to enhance their offerings.

Wipro Technologies, for instance, recently set up a separate healthcare practice by re-grouping its different units offering healthcare solutions. “We are seeing a strong level of momentum as healthcare players look to adopt technology to cut costs and improve their efficiencies,” says Rajiv Shah, head of healthcare practice at Wipro Technologies, adding the regrouping of units to carve out a separate practice was to complete solutions, by focussing on the entire industry in a holistic manner.

The product engineering group at Wipro works with healthcare equipment makers while the BPO unit works with both healthcare payers and providers. Besides, Wipro also offers healthcare solutions such as hospital information management systems and data centre services through Infocrossing.

A survey by analyst firm Datamonitor has revealed that the healthcare industry will significantly increase IT spending in 2009 as growing demand for healthcare services from the aging ‘baby boom’ generation in Western Europe, the US and Japan leads to rising costs for national and private health systems in these countries.

In an attempt to address this, the healthcare industry is currently investing in new technologies that will enable it to cut costs in the long run and provide more efficient care.

“The economic crisis is not affecting us in any form” Gary Cohen, executive chairman and CEO of iSoft, an IBA Health Group Company, one of the largest healthcare software solutions providers, said in Bangalore late last year. iSoft earns the bulk of its revenues from the public sector, in countries such as the UK, the US, Australia, Spain, Germany and Italy, where healthcare is a focus area for the government. iSoft stands to benefit from the rising spends on healthcare in developed countries that varies between 9 and 12 per cent of the GDP, Cohen said.

Debashis Ghosh, Vice-President & Global Head – Life Sciences and Healthcare ISU, Tata Consultancy Services, says, “The healthcare sector is one of the highest-ranked industries for year-over-year growth. The global healthcare technology (hardware, software, IT Services) spending is expected to grow from $56 billion in 2008 to $92 billion in 2013 at a CAGR of 10.5 per cent. The healthcare provider BPO market is expected to grow from $16 billion in 2008 to $24 billion in 2013 at a CAGR of 8.15 per cent.”

K Vinayambika, Vice-President, Healthcare Practice, Cognizant, seconds this view. “Our estimate on the healthcare market is quite bullish with an estimate of $100 billion, globally for IT/BPO services, by 2010. In Q4 2008 (quarter ended December 31, 2008), our healthcare practice represented 25 per cent of our revenues. For the year 2008, healthcare grew at 36 per cent.”

KEY DRIVERS:

WHAT IS DRIVING THE INDIAN HEALTHCARE VERTICAL?

“The Indian healthcare industry is interestingly poised,” says Mohammed H. Naseem, Leader – Healthcare Sector, IBM India/ South Asia.

“It is increasingly seen as a global hub with distinct advantages of clinical excellence coupled with low costs. The IBM Institute of Business Value (IBV) report on ‘Healthcare in India, Caring for more than a billion,’ says India’s healthcare spending will increase by nearly 400 per cent between 2007 and 2015.

India’s healthcare spending on care delivery and drugs will increase from $27 billion in 2007 to $126 billion in 2015. This growth will be driven by increased spending at both private and public hospitals and by rising medical inflation. Reasons for growth vary. “Healthcare, which has a much smaller appetite for IT, is showing an increased inclination to deploy IT in order to build scale, and improve efficiency. Many large corporate players in both provider and payer space have initiated projects for comprehensive deployment of IT with a long-term horizon. Similar initiatives are visible from many progressive State governments,” explains Naseem.

Wipro recently won a Rs 1,182-crore deal from the Employee State Insurance Corporation that is aimed at improving healthcare services to ESIC beneficiaries by providing online facilities to employers and insured people for registration, payment of premium and disbursement of cash benefits.

Recession-proof?

Explaining the effect of recession on the space, Ghosh says “Although healthcare is considered a recession-proof industry, as people don’t stop falling sick when the economy slows down, patients cut back on their healthcare expenses, foregoing elective procedures and using generics where possible. Revenue and funding curtailments will also cause a shift in IT spending patterns.

On the other hand, in the current economic crisis, healthcare technology offers enormous benefits to the industry, including ways to decrease costs while improving care and increasing access to care.

While outsourcing trends will certainly affect the space, Govind S, Managing Director, iSOFT, says, “Governments worldwide are re-committing themselves to healthcare spending, including health IT. The Obama Administration has committed around $17 billion to health IT as part of an economic stimulus package. More than 80 per cent of our revenues are publicly funded, directly or indirectly, which adds to the stability and predictability of our earnings.”

New Business:

As are the flavour of the season. Recently, IBM announced an initiative with Google in the area of electronic health records. This will allow Google Health, a site where users can store and track information about their medical history, to connect to and stream data from medical devices, to offer a new immediacy to health monitoring.

Vinayambika is happy over Cognizant’s recent five-year IT services deal with a large US-based healthcare firm. The company’s other large agreements include a five-year IT-BPO deal with a large pharma firm.

iSoft’s latest contracts include partnerships with the Erasmus MC (Medical Center) in Rotterdam and Hospital Diaconessenhuis Leiden in the Netherlands totalling A$ 17.6 million besides contracts with Australian private hospital provider, Healthscope Ltd, valued at A$ 4.2 million over three years.

New Research:

With new clients and available resources, companies are commissioning research into new products. TCS is looking to increase the penetration and adoption of healthcare technology. This covers areas of electronic medical records, clinical decision support and telemedicine solutions, among other things. Health Monitoring Framework Research is where it is focusing on prototyping miniature devices to monitor health and manage associated medical data. Cognizant’s recent initiatives are in the areas of HER (Electronic HealthRecord), RFID, Clinical Data and Standards, SOA-based services, Health Analytics, Portals and Self services, HIS Systems, Remote Monitoring and Telemedicine.

Recruitment Scenario:

Normal 0 Hiring is on in the healthcare space. Mahesh Malneedi, Managing Director, Makro Group, says, in the last year, the company recruited over 150 candidates in the domain. “Positions from BPO, ITES and IT companies specialising in Healthcare vertical include medical records manager, document management programmer/analyst, image processing analyst, healthcare analytics, EDI programmer, HIPAA analyst/tester, clinical applications analyst, healthcare system analyst, IT billing analyst, healthcare architect, technical support, network/system administrators and others,” he explains.

He advises candidates to keep an eye out on healthcare blogs, healthcare portals, job sites, references, consultants and print advertisements for job postings in this domain.

iSoft is recruiting as is e4e India and Cognizant. Special skills are in demand. “In case of researchers or architects, the minimum experience we look for is someone with three years of experience though someone with five or more years in a similar role, especially in healthcare or SOA development or design and large scale data centre-development, will be preferred,” says Govind S.

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