Given the two-three year rollout period for EHRs, large contracts will be awarded within the next 12-24 months. Similarly, the reform to extend insurance coverage to everyone is likely to be signed into a law by early 2010, with the newly insured expected to finalise their choice of health plans within a six-twelve month window.

However, speed without insight could prove expensive and fruitless. Ambitious players need to develop a deep understanding of the needs and intricacies of the US healthcare landscape. Health insurers and hospital administrators typically expect a high degree of industry knowledge from their contracting counterparts. For an Indian technology firm, this might translate into hiring key individuals, or partnering with existing players with the requisite domain expertise.

While notable exceptions do exist, Indian companies do not enjoy a long track record in healthcare. This means they need to quickly establish their reputation and credentials in this fast-evolving space either through partnerships with established insurers and hospital networks, or by making very competitive proposals for high visibility contracts.

Another key element of success is to devise an operational set-up that appropriately balances offshore and onshore locations to optimise value as well as service. While many back-office functions can be sent offshore, most of the front-office, patient and physician functions will need to be delivered from onshore locations.

The above challenges are real but possible to meet. India’s technology firms surmounted similar obstacles in cultivating America’s captains of finance during the 1990s. Now, they must bring a similar mix of ingenuity and tenacity to bear on the country’s doctors, insurers and hospital administrators. A success will mean a strong foothold for Indian IT companies in America's one economic sector—healthcare—that is truly evergreen and resilient in its spends through recessions as well as boom years.

Additional reporting with Sam Marwaha and Ranjit Tinaikar

(Andre Dua is a partner and Sam Marwaha a director at McKinsey based in New York, while Ranjit Tinaikar is a partner based in Mumbai.)

Source: Business Standard