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US Health Bill: Indian IT gears up to cash in on Rs 1 lakh crore bounty

Health care 10-09

With healthcare reform in the United States regarded as the biggest opportunity to come Indian software’s way since the Y2K bug, IT services providers are shopping around to tap into the Rs 1-lakh crore ($20 billion) bounty.

They are enhancing their technical capabilities in healthcare through niche acquisitions to swiftly expand in an area which has been eclipsed for many years by the lucrative banking and financial services sector.

Back office processing firm EXL Services acquired US-based Landacorp in October last year, just ahead of President Barack Obama’s second term win. The victory set to rest uncertainty around whether some of controversial provisions of the Patient Protection and Affordable Care Act (derisively called Obamacare by opponents) would beimplemented and also gave a fresh impetus for more service providers to go after acquisitions.

Since then Cognizant Technology Solutions has acquired MediCall in a low-profile transaction it completed in December and announced as part of its fourth earnings call in February. In the same month, business process outsourcing leader Genpact said it was acquiring Jawood, a provider of business services to the healthcare insurance industry.

Spending on healthcare sector accounts for over 15% of US economic output and the Obama administration is trying to expand coverage to uninsured people while lowering the cost of healthcare. This means Indian companies can bid for new projects in the areas of data conversion, creation and management of electronic health records, as well as claims processing and insurance sales. The healthcare sector contributed to less that 5% of the $100 billion revenue of India’s software and services industry.

From around 6% of revenue in 2012, EXL expects revenue from servicing US healthcare to go up to 10% in 2013 as a result of the Landacorp acquisition. Experts believe that for the first time the opportunity is shifting from administrative cost, or the back office, to medical costs. So this is going it more knowledge driven.

Among the changes mandated by the healthcare overhaul, insurers must ensure better control not just over administrative costs but also over medical claim costs. This could mean insurers have to follow up with patients to reduce risky behaviour that increases likelihood of claims in what is referred to as ‘disease management’ and, for the healthy, ‘wellness management’.

This also requires investment in technology and ‘care management platforms’ to capture information along the lines of what players like Landacorp offer. EXL also employs around 600 US-licensed nurses in Philippines to cater to demand for services requiring knowledge of US healthcare standards.

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