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China: Health Reforms a Boon for IT
Source: China Daily
Source Date: Friday, April 16, 2010
Focus: Electronic and Mobile Government
Country: China
Created: Apr 19, 2010

Since announcing plans last year to revamp the Chinese medical system with the injection of 850 billion yuan over the next three years, foreign technology firms have been scouting for opportunities amid healthcare reform plans in the world's most populous nation.

"The whole market is about to boom," said Ben Zhou, managing director, Dell Services Public Sector, China, who oversees the company's healthcare arm in China. "Everyone is getting prepared and those firms who previously don't have business in this sector are also coming into the market."

Zhou expects the details of the government's 850 billion yuan healthcare stimulus, which is expected to unleash huge IT demand for massive facility upgrades in hospitals and the establishment of a national healthcare system, will be unveiled as early as this year.

That, he said, would double the size of China's healthcare "informatization" market in the next two years and result in explosive demand for new software, hardware and IT services, especially from rural areas where there were few IT facilities.

The Chinese government announced last year its plans to invest 850 billion yuan over the next three years to ensure fair and affordable care for the entire 1.3 billion population.

That could translate into orders worth billions of dollars for hardware and software from the country's huge public health system and over 300,000 hospitals, where demand for IT systems and facilities has long been stifled by the country's rigid medical system.

Deng Haihua, spokesman for China's Ministry of Healthcare, said in January that the detailed health care plan has been sent to the State Council, China's cabinet, for approval.

That has raised expectations that a government-led healthcare reform covering China's entire population is in the offing.

Chien Dah-Chuen, general manager of IBM Greater China Group, said his company expects at least 1,000 Chinese hospitals to invest a minimum of $1.5 million each on software and related services in the coming years, encouraged by the government's investment plan.

According to statistics from China Hospital Information Management Association, a non-profit industry organization, investment in computerization only amounted to 0.7 percent of a Chinese hospital's total income, while the IT budget of hospitals in developed countries is on, an average, 2.4 percent of their total budget.

"In fact, investment in IT plays a critical role in China's medical reform plan because it is nearly impossible to provide fair and affordable healthcare service in such a huge country without the support of information technology," said Yao Zhihong, an expert from the Chinese Health Information Society.

With the current mix of a socialized and private healthcare, which was implemented in the early 1990s, China's hospitals, especially those in rural areas, are often without even basic IT infrastructure. At the same time, as a result of a government push to reduce funding and encourage hospitals to fend for themselves, most hospitals purchased medical equipment that directly generated revenue rather than computers and software.

Zhou from Dell Services admits that it is very difficult to quantify the return on investment in software applications, infrastructure and IT services in hospitals. But he expects the ongoing healthcare reform plans will encourage hospitals to spend more on IT facilities.
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