Dell?s $3.9 billion acquisition of Perot Systems to take on IBM and Hewlett-Packard in computer services is also crucial to get a chunk of IT?s hottest market? healthcare. Perot, which earns about half of its $2.8 billion revenue from healthcare projects, will peg Dell in a stronger position to get a slice of the $36 billion the US federal government is poised to spend on IT related healthcare projects, including spread of the use of electronic medical records. Kevin M Fickenscher, executive vice-president for international healthcare, is pushing hard for healthcare reforms.
Even as the company eyes the US opportunity, it has cracked its first mega IT oursourcing deal from Max Healthcare. Relying on his informal interactions with leading healthcare firms? head honchos, Kevin is confident of spreading IT into Indian healthcare market, from big hospital chains to small clinics. In a chat with Pragati Verma, he cherrypicks the biggest opportunities in the US healthcare segment and describes the company?s plans to penetrate into the Indian healthcare market. Excerpts:
Do you think that the US government is going far enough and fast enough on the healthcare reforms?
To begin with, I do believe that we need to reform the healthcare system. I think the incentives of the current system are perverse and contribute to our problems. We don?t pay for quality or outcomes. We pay for procedures and doing things to people. When a 58-year-old woman comes in to see her family physician about next steps in her treatment for pancreatic cancer, the incentives for the physician are to meet the Relative Value Unit measures set by the practice and not to spend an hour talking about options.
If you ask me, US healthcare system is performing exactly the way the incentives are telling it to perform! In Japan, for instance, physicians get incentives to work on prescriptions and we see the highest percentage of drug prescriptions per patient there.
So, the problem is with priorities and not the government spend?
Currently, we spend over 17% of gross domestic product (GDP) on healthcare in the US. It is projected to cross 20% in the next decade. That?s a huge amount of money. India would spend about 5% of GDP on healthcare, which is clearly not enough. But we in the US have to ask ourselves if 17% is too much, especially as the economy flattens out.
I don?t think it is bad to include everyone under the health insurance umbrella. In fact, I am in favour of it. But, if we?re going to include everyone?which seems to be what just societies should do?then we need to be responsible for creating proper incentives for healthcare delivery.
However, I do not believe our country can afford an increasingly larger percentage of the economic pie going to healthcare. We also need to invest in public education, which is the cornerstone for creating our nation?s future wealth, or reinvest in our withering infrastructure of roads, bridges and water supply systems. We, as a society, place a host of demands and expectations on our governments?both state and federal?where we expect good solutions and effective resolutions. Healthcare is one of the many demands in an era of increasing constraints.
While you are looking at offshoring parts of the expanding healthcare business, you have bagged an outsourcing deal from Max. Are other Indian hospitals ready for the transformation?
We have just won a 10 year complete outsourcing deal from Max. This win is the first IT outsourcing contract outside the US for Perot?s healthcare practice. Expansion outside the US is a key focus area for us. We are looking to grow our healthcare business in emerging markets like India, China, Brazil and Mexico. The maturing healthcare industry in the emerging markets has a big appetite and also funds to invest in technologies such as electronic health records and clinical information systems.
The contract with Max has an initial value of $18 million but could go up in value as more applications and services are added. We will run the applications already installed and also deploy an electronic health records systems and other IT infrastructure.
Have you identified the biggest opportunities in the Indian market?
India has a different culture and the retail system here is stronger. When you go to a doctor, you take the money to pay him with you in your pocket. In countries like India and China, one also finds a lot of disparity between the kind of healthcare available to people in different areas.
While there might be competitive issues, hospitals can share information on diagnosis, insurance and allergy history.As India develops an insurance system, connectivity will be important.
When I meet CEOs of various healthcare organisations, I realise that they understand the need to develop IT capabilities. They need to improve their backend operations and track patients better through the use of modern information systems. While the immediate opportunity is from private sector, but government hospitals will follow soon.
Are Indian hospitals that don?t even network with each other ready for the cloud model?
Hospitals and healthcare chains are only now realising the benefits of networking. It?s important to be able to move the data and we need interoperability standards for that. This is the right time for Indian hospitals to interconnect and share information. And we are not only targeting large hospital chains but even small-sized clinics. We have actually demonstrated this in the US and we are going to bring this to India. We can go to a physician?s office and say here is the computer, technology, and just connect it to the cloud. That?s going to be attractive as they don?t spend upfront and only make a flat payment every month.