According to Cognizant Technologies vice-president Mohan Narayanan, as against the earlier predictions of a $40 billion opportunity for IT companies in the HIPAA compliance segment, it is now estimated to be worth only a $2 billion market from both the health insurance and health providers perspective, he added.
The opportunity offered by HIPAA could be tapped only by a niche healthcare player in the market and is not a great opportunity for new entrants in the segment, Mr Narayanan said.
According to him, out of the three areas of HIPAA - privacy, transactions and security - transactions are the only area which IT companies can tap.
The reason for market estimate going down drastically could be also due to deadlines for HIPAA compliance being pushed back (the current deadline for transactions is October 2003), he said.
According to Mr Narayanan, though opportunities for IT companies in health care segment is recession proof, the segment is highly regulated.
Companies capable of meeting the regulatory requirement could exploit all the three areas drug discovery, health care providers and health insurance players.
US followed by Europe are the two major markets in the healthcare segment and the US healthcare segment alone is estimated to be worth $3.8 billion.
The focus areas for IT in healthcare segment covers quality of care by reducing medical errors using IT tools like e-prescription, case management systems, system integration, etc.
Administrative efficiencies where potential solutions like e-connectivity bring down paper work, work flow solutions, BPO (business process outsourcing) and data analytic solutions also have good opportunities.
In the pharma segment, all areas of drug discovery cycle can be tapped by the IT companies including pre-clinical and clinical trial stages, as the use of IT can bring down the time frame for these processes considerably, Mr Narayanan said.
On Cognizants healthcare solutions, Mr Narayanan said that about 25 per cent of the companys revenues of $229 million comes from the health care segment mainly contributed by US and European markets.
The company also plans to enter the BPO space where it would start with offering BPO services for its customers and would look at expanding into high-end BPO business later, Mr Narayanan added.