In the digital era, it is a given that IT is often the backbone of any major industry, including healthcare. Not surprisingly, there has been a steady increase in IT spending by the Indian healthcare sector. In fact, a rather rosy picture emerges if one were to look only at the absolute numbers that are being talked about.
For example, according to market research firm Gartner, spend on healthcare-related IT in India was slated to be about US$1.2 billion in 2015, an apparently healthy 7 percent increase year-on-year. Peel a couple of layers and we see a rather different and somewhat worrying picture.
- In the United States, healthcare IT expenditure exceeded US$34.5 billion in 2014 and was estimated to be about US$40 billion in 2015 (a jump of almost 16 percent year-on-year)
- Western Europe saw healthcare IT investment of US$13.3 billion in 2013, which is projected to reach US$14.9 billion in 2016 (a 12 percent growth year-on-year)
- India’s investment was projected to increase from US$1.08 billion to US$1.2 billion (an 11 percent growth on a significantly smaller base and for an industry that needs to cater to an audience that is several times bigger!)
An apparent reluctance to spend on healthcare IT
As compared to a global average of 2–2.5 percent of income spent on IT by healthcare providers, or even 6-15 percent being invested in IT in other sectors within India, anecdotal data from multiple sources indicate that healthcare providers in India rarely spend more than 0.5 percent of their annual revenue on information technology. Rather than investing in the necessary or customized (and consequently more expensive) software solutions that best suits the needs of the hospital, the oft-used strategy is to find cheaper available solutions or adopt those that have been created for smaller setups.
Instead of capitalizing on the immense potential of IT as a competitive differentiator (especially at a time when they could have a substantial first-mover advantage), hospitals in India seem to embrace the “cheap is good, free is better” philosophy. May be it has to do with a legacy mindset from about 20 years ago; however, it is indeed surprising considering the big and aspirational strides that many industries in India have taken.
Another probable cause for this lack of investment is that Indian healthcare is a capital-intensive industry, featuring substantial payments on land and infrastructure during setup, and routine expenses for the purchase, repair and maintenance of equipment. In such a scenario, hospital management prefer to invest in machinery such as CT Scans, which can begin generating a return immediately, rather than spend on technologies that will have a significant turnaround time before benefits begin to visibly accrue—an unfortunately short-term perspective.
As a consequence, IT vendors in India are not challenged to innovate and develop new software solutions comparable to those followed by the rest of the world.
Potential to radically change the healthcare industry
Objectively, the scope for IT adoption in the healthcare sector is immense, with solutions that can increase efficiency, cut costs and streamline processes. On an immediate basis, good software solutions can help hospitals compensate for an insufficient workforce while compiling and maintaining an ever-increasing volume of patient and administrative data. From core healthcare functions such as maintaining secure centralized patient files or medical records to the complete suite of administrative and management functions including billing processes, procurement and inventory management, improving asset and process optimization, a robust IT system can prove to be a critical transformational tool for a healthcare provider.
Healthcare providers can also leverage trends such as Big Data and data analytics to get the best yield from their investments. These tools make it easier to identify gaps and inefficiencies in processes that could be creating risks and/or substantial costs; complete patient data allows for proper treatment as well as predicting possible illnesses; patient histories can allow trend identification thus allowing time to prepare for and treat imminent illnesses and epidemics.
Easy to use, portable medical data also make it possible for hospitals to overcome some of the limitations and challenges that they traditionally faced—space limitations, being one example. Healthcare providers can cost-effectively serve a lot more patients needing both curative and preventive healthcare leveraging the enormous potential of telemedicine, a still nascent area in India.
Embracing the Future of Healthcare
It is fairly obvious that investment in IT products and services in healthcare are a surefire way to increase productivity and efficiency while becoming cost effective over the long-term, which makes the initial capital outlay more than worthwhile. The end results absolutely justify and mandate the expense.
But being a cost cutting tool is not the only way that hospitals should view information technology offerings. In addition to the total scope of services offered, hospitals in India need to recognize that packaged software offer the quickest time-to-market for their Patient Satisfaction initiatives. Cloud based solutions further reduce the cost of such solutions. An investment in good quality software on the Cloud can help hospitals keep up with technology whilst reducing cost of ownership at the same time. The time to act is NOW.
The longer Indian healthcare providers put off adopting the best IT tools, the further behind the world will leave them.
Sources: Deloitte 2015 Health Care Outlook India; IT Spending in Healthcare Sector to Reach $14bn by 2018, PCR; IT Spending in Healthcare on the Rise, Growing Fast Towards 2019, Communications for Research; Medical clinics rev up IT spending, BenefitsPro.com; Gartner Says Healthcare Providers in India to Spend US$1.2 Billion on IT in 2015, Gartner; Health Data Management; Health IT Spending to Top $3.4 Billion in 2014, Healthcare Informatics; Healthcare IT Spending in India is Expected to Grow to $609.5 million in 2013, Express Healthcare; All India Institute of Medical Sciences.
—By Tirupathi Karthik
The author is the CEO of Napier Healthcare, a Cloud provider of Urgent Care and Long Term Care software solutions based in Singapore. Built-in native mobility further enhances the adoption of all these solutions across a widely spread geography that includes Asia, Middle East and USA. This piece first appeared on ETHealthworld.com, an initiative of The Economic Times (India) on January 22, 2016.