IT spends of hospitals poised for growth

IT spending by healthcare sector in India is poised for a big growth in the next five years. Industry sources estimate that looking at the enormous growth of the number of hospital beds every year and mushrooming of new hospitals, the healthcare industry is projected to spend about $1 billion towards healthcare management applications from the current $300 million outlay.

As per the global standard, each hospital spends about 1.5 per cent to 2 per cent of their total annual revenue towards building up IT infrastructure.

Although the healthcare sector in India is being considered as one of the lowest IT spenders, looking at the growth in the number of foreign patients and opportunities in emerging areas like medical tourism, apart from the large hospitals, even the medium-sized hospitals are also waking up to the need of having a comprehensive IT platform.

This will help them in taking care of the patients' records, customer relationship management, enterprise resource planning (ERP) and financial control among others, says Mohammed H Naseem, vice-president - Healthcare, IBM India.

Traditionally, the hospitals in US are considered large spenders on IT and invest about 3 per cent of their revenues in IT (including hardware and software), followed by the European hospitals around 2 per cent of their total revenue. Even the hospitals in Australia, Japan and Singapore spend about 1.5 per cent of their total revenue on IT.

At present, most Indian hospitals, on an average, spend about 0.5 per cent of their total revenue on IT infrastructure. Though they are way behind their global counterparts, IT solutions providers are now witnessing a tremendous traction from them.

"While most of the large hospitals in India have already put in place a sound IT infrastructure and are planning to do so in the near future, many mid-sized hospitals having 150-200 beds are now joining the fray," says Ashvini Srivastava, president - Strategic Initiatives, Apollo Hospitals.

According to a CII-Mckinsey study, the healthcare sector in India is expected to become a $47-billion industry by 2012. "To be globally competitive, the healthcare sector spends about 2 per cent of their revenue towards healthcare management solutions, the IT spends of the Indian healthcare sector is expected to be about $1 billion in the next five years," says Srivasthan A, Head - Healthcare Business Solutions, IBM India.

Looking at the potential of the hospital solutions market in India, IBM has partnered the Apollo Hospitals Group to build a national health data network called `Health Hiway'.

The partnership aims at providing a diverse set of software applications to the healthcare segment, mainly targeting the mid-sized hospitals. The applications, built on IBM's platform and developed by Apollo, could be deployed by the hospitals who don't have an IT team in 2-3 weeks' time, since they are modular in nature.

Currently, there are about 1,500 mid-sized hospitals across India, with each year around 500 such hospital getting added. According to IBM, the market potentials for 'Health Hiway' in India is expected to be around $300 million by 2012.