07 2013

Sridharan Mani, Director and CEO, American Megatrends India, in this white paper, discusses the IT investments made in the healthcare segment and analyses whether they provide the desired results in terms of ROI

India is one of the world’s most lucrative healthcare markets and is expanding rapidly, according to latest findings of a report titled ‘Indian Healthcare – New Avenues for Growth’. NHRM funding has been increased by $4.14 billion in the budget 2012-2013 for the current financial year. According to Fitch, the current size of Indian healthcare industry is $65 billion and is expected to reach to $100 billion by 2015. India has the fastest growing healthcare IT market in Asia, with an expected growth rate of 22 per cent, followed closely by China and Vietnam (Source: Springboard research). Indian IT market is poised to be $250 million by 2012.

Combined study by industry body and Ernst & Young suggests that India will need as many as 1.75 million additional beds by the end of 2025. Further, an investment of $86 billion is required to achieve one doctor, two beds and 2.3 nurses per 1000 population by 2025. The above facts clearly indicate that the healthcare industry in India is growing at rapid phase and also the investments being made in IT is also increasing year on year.

IT in healthcare

IT has positively impacted every industry, and healthcare is no exception. The latest generation medical equipment with sophisticated system has supported physicians to diagnose and cure patients from critical and life threatening diseases. Technological advancements in telemedicine, picture archiving and communication systems (PACS) and healthcare information systems (HIS) have made significant inroads in providing better system for patient care.

Return on Investment (ROI)

The basic mantra would be that if the income from the investment were more than the expenses made to it, it is considered as positive ROI. Many healthcare institutions are happy when the equipment purchased or IT system implemented returns positive ROI. This outlook promotes competition with other healthcare institutions and makes them invest in new equipment and technologies that provide them with better brand image in order to keep the competition away. Since the cost of investment is rapid increasing, the ROI is also affected.

It can be easily argued that investments made in IT healthcare are more related to improving the branding and imaging in the market place. However, the real revenue for any healthcare institution comes from providing efficient patient care.

The big question is that has investments in IT improved the efficiency in providing better patient care and thereby increasing the ROI?

It could be fairly said that the healthcare institutions across the globe have made significant investments in IT and medical equipment. However, the return on investment from this is always objective and is highly questionable. The reason being that many of such investments have become merely an expense, as it did not provide the desirable returns.

Why IT investments have turned into an expense?

Manual processing: Several investments made in healthcare IT are related to collecting, storing and maintaining patient health related details. However, these systems are not used efficiently.

Some of the reasons are:

  • The clinicians record patient information, diagnosis and treatments on paper, in a free style manner known as the “Case Sheet”. This still remains the record for physicians to do the analysis.
  • Even though some of the super-speciality hospitals have started using IT systems and equipment for medical information, the patient information is merely collected in electronic form and the hard copy of the medical record is attached to the “Case Sheet”.
  • The file folders with full slips of paper and massive file rooms are still the norm in most of the public and private hospitals in India.
  • If a patient has to visit more than one department in the same hospital, then separate records are created in each department with the same duplicate information. It is often seen that same information that as name, age, gender, height, weight, etc., gets repeated often in multiple places without the need for it. This ends up in duplicating the efforts and leads to more paper filing. Collating all these documents and forwarding to physicians are always delayed and it keeps the physician away from providing timely care to patients.
  • More often than not these paper-based records are misplaced or lost, which in turn causes unnecessary delays or leads to repeating the procedure all over again.
  • Due to high volume of paper-based records, the storage space requirement increases and also escalates overall maintenance and support costs. Moreover, retrieving information is time consuming and many a times, the physicians provide consultation to the patients without any patient health records.
  • These paper-based systems increase the cost of service and compromises on overall efficiency. The quality of service delivery in many cases is affected.

Fragmented systems: Healthcare institutions make high-cost investments to bring in advanced technological equipment for diagnosing and treating patient illness. However, these systems tend to be standalone and never get integrated with the hospital information system. The health vitals and other information collected from these systems never get digitally stored. These records are not made available to physicians for comparative analysis until paper-based records from these systems are stored in a file. In many cases, the systems tend to be very expensive and to break-even the cost by itself is a challenge.

New technology disruptions: When a healthcare institution implements a new system/equipment, the old system becomes obsolete. The patient history/ health information in many cases is not imported to the new system (due to incompatibilities) and hence get lost. The healthcare institution would be forced to run both systems in parallel, as they are not compatible. This increases the overall operational cost and support and in turn reduces ROI.

Poor utilisation of assets: In many cases, the systems and assets purchased for improving the efficiency in providing quality healthcare is not efficiently utilised. Hence, the assets lie dormant and do not provide the required returns. Some of the reasons are:

  • Asset found missing from its location and needs to be tracked. It becomes more critical during emergency times
  • System is so complex that only an expert can work with it
  • System requires more manual inputs and it is too time consuming
  • User needs good amount of training to handle the system. With increase in attrition rate, the trained users are not available to work with the system/ asset. Hence, less efficient and paper-based systems are used

How to increase ROI?

In today’s scenario, the ‘IT has barely touched the patient care’1 and it needs to change. Healthcare institutions should focus on improving operational efficiency to increase customer satisfaction. The goal of any healthcare institution is to provide better patient care to improve customer retention and increase the rate of returns.

In order to achieve better returns, it is important to realign the organisational practices and implement measures to improve customer satisfaction. The following measures could be used in any healthcare institution to leverage better returns from their existing investments.

Data collection to decision support: The IT systems should not be merely used as data terminals for entering patient information and printing records for filing. All healthcare institutions have some form of HIS. The data terminals should become part of the HIS ecosystem and all the information collected from this data collection terminals should be automatically loaded into HIS without any manual data entry. This would help save time and costs as well as reduce paperwork. Since the information is stored electronically, the physicians and clinicians can access patient information and history from anywhere to provide better patient care.

Standalone to integrated: Medical equipment that are standalone should also be integrated with HIS. The output from MRI, CT SCAN, PACS and others should automatically be uploaded to patient records in HIS. Having multiple systems maintaining the same information is a cause for confusion. The medical equipment come with advanced communication mechanism to support easy integration with HIS. Hence, steps should be taken to integrate these equipment/ systems with HIS using glue code/ logic.

Improve asset utilisation: Implementing systems to track asset location and monitoring utilisation can help to improve the returns derived from the assets. Misused or assets with low utilisation incurs more expense than returns. Also, the assets need to be in place and available at the right time for clinicians to do their tasks efficiently. Proper tracking of assets and preventive maintenance will help to increase the life value of the asset and its returns.

Investments in new technologies/ equipment: Healthcare is a rapidly growing field and investments in the new technologies are always welcome. However, enough care should be taken to ensure that these technologies can co-exist and integrate with the existing set-up that is being used in the healthcare institutions. If this does not happen, then the years of accumulated data on patient care, diseases and diagnosis would become unusable. The information gained on decision-making would be lost. Hence, while selecting a new technology, it is better to evaluate whether the system is downward compatible. If not, alternatives should be identified to have the system integrated with existing systems using glue code/ logic.

Also, it is important that the new systems implemented are user friendly and easy to use. Complex technologies and systems will keep the users at bay. Implementing new technologies/ equipment with detailed planning and integrating with existing set-up can help achieve higher ROI.

Workflow: Email-based tracking and manual tracking are less efficient and time consuming. By implementing AIMS, ITIL V4 based service delivery and support system, the issues can be tracked and escalated, based on the service level agreement (SLA). Automating the work-flow helps to speed things and ensures that the right task is assigned to the right person in the right queue. With automated ticketing and workflow, the tracking of issues gets centralised and easy and the senior management can have a complete control over the issues that affect the growth and returns.


Investments made in information technology are no longer considered as costs and they should provide tangible returns. A solution driven approach should be considered while implementing systems. Discreet systems increase manual work, costs, maintenance and affects productivity. All systems should co-exist and integrate with HIS platform to provide desired returns. New system implementation and equipment purchases should be integrated with the existing setup to provide better returns. IT investments should be made to improve patient care and increase customer satisfaction. Any IT investment made should be backed by the core business objective of achieving higher ROI.


1. Institute of Medicine report: Crossing the Quality Chasm: A New Health System for the 21st Century. Washington, D.C.:National Academy Press, 2001, p.176.