Keane Insight

IT in healthcare: the PwC view

Healthcare is one of the fastest-growing verticals in India. In tune with global trends, this sector will be in focus from a social and a business perspective, says RAJARSHI SENGUPTA

THE Indian healthcare sector has started focusing on serving customers better, keeping in mind the need to balance a robust and profitable business operation and meeting broader social objectives.

A particular focus area has been how service to the end-customer, the patient, can improve. As has been the case with performance improvement initiatives in other verticals, IT has played a critical role in providing the bedrock of operational systems. These systems can streamline information processes of an organisation, iron out inefficiencies that grow due to lack of information, and be employed to assist the delivery of better care to patients.

Recognising such trends in the healthcare sector, PwC has brought out a research report HealthCast 2010: Smaller World, Bigger Expectations that focuses upon the issue of IT in healthcare. HealthCast Tactics: A Blueprint for the Future builds on this research report. One of the main trends that the report talks of is the move from a supply-driven system to a demand-driven system marked by an ageing population, increasing costs of healthcare, and a strained hospital system.

As IT is one of the tools being used to bridge this gap, it should be kept in mind that technology costs are also lifting overall expenditure.

IT as an enabler

A healthcare organisation’s ability to digitise internal business processes will improve its productivity and restrain costs in the long run. In the short run it will be expensive. Technologically-savvy healthcare organisations are embracing enterprise-wide IT projects that move data to a single platform to manage an increasingly complex and customised business. Such projects involve two-to-five year timeframes.

In developing the hospital system of the future, there are a couple of areas where IT and ITeS can play a vital role. For example, in the area of ITeS, as hospitals focus on speciality services, many are letting go of clinical and administrative functions that can be performed more efficiently by external vendors. While outsourcing has been adopted by hospitals in the US for decades, the footprint is smaller but growing in Europe, Australia and Canada. In the UK, many public hospital buildings are being rebuilt through public-private partnerships. A key feature of these partnerships is outsourcing of non-clinical services such as food supply and housekeeping.

Role of e-commerce

As pointed out in the PwC report, IT has also started playing a key role in driving down costs and improving margins. Medical supply costs can run between 15 and 25 percent of a hospital’s budget. Hospitals are reducing that percentage through electronic ordering and management of vendor contracts. While many e-business start-ups saw a bonanza in bringing online supply management to healthcare, the promises of that trend have been largely unrealised. In 1999, more than 50 e-supply chain companies were vying for the business of hospitals and physicians. For the greater part, hospitals’ materials management systems could not integrate with these e-business companies. In addition, many were fearful of contracting for important supplies with start-ups. Now, with the dotcom shakeout over and only a handful of e-supply chain companies still in existence, hospitals have more confidence in their viability.

“Cooperation between providers, distributors and manufacturers is critical because of the sheer expense and technology involved,” says Mike Mahoney, chief executive officer of Global Healthcare Exchange (GHX). For healthcare to receive the benefits of e-commerce, companies with a wide variety of interests will need to work together toward the same goals.

A key area where IT is playing a major role is in understanding that caregivers and patients will want information to be available at their fingertips, and IT systems such as data warehousing have a key role to play in this. Hospitals are slowly moving towards clinical information systems, and those that do so will find their costs lowered, their quality raised, and their cash flow improved.

Integrate and simplify

A similar move to simplify what are referred to as Payor Systems (insurance, etc.) suggests that single-platform information and warehousing systems will help Payors simplify, integrate and standardise their systems. A single platform data warehouse lets Payors run a variety of business applications, including real-time data mining and e-business personalisation. The data warehouse is placed between the back-office enterprise resource planning (ERP) system and the front-office customer relationship management system (CRM). Healthcare organisations can learn from the data warehousing experience of other industries. Large national and regional Payors will require data solutions that enable them to collect, aggregate, manage, analyse, filter, customise and distribute information throughout their organisations. It’s difficult, if not impossible, to do so on multiple legacy systems that cannot communicate with each other.

As in other countries, in the Indian context the use of such IT systems will also be influenced by issues of information privacy. Overall, the trends of IT use in healthcare reflect similar trends in other industries in the past decade. Both Indian and foreign companies have come up with niche ERP solutions for this sector, so one should see an increase in the use of IT to deliver better care to consumers in the coming years.

The author is executive director, PricewaterhouseCoopers.