China's healthcare sector to drive IT spend

Rapid development in community health services leading to increased IT adoption, fueling IT spend to US$3.8 billion in 2012 new report finds.

As China's healthcare industry continues to modernize, the country's IT expenditure in this sector is expected to rise from US$2 billion in 2009 to US$3.8 billion in 2012, according to a Springboard Research report.

Liu Jingwei, senior research analyst in Springboard Research's Greater China office, said in a statement there is an increased focus by China's hospitals to modernize its IT infrastructure and facilities. This drive to improve facilities can be attributed to the competitive healthcare vertical, which is "highly fragmented" by technology solutions as well as local and multinational companies, she added.

"[China's healthcare sector] is increasingly viewed as a hot industry by the world's leading IT vendors, driving increased investment in product development, acquisitions, sales and marketing," Liu noted.

One technology currently seeing rapid adoption is electronic medical records (EMR). This has led the Chinese government to step in to guide and regulate EMR development, at a national, rather than local, level. In fact, EMR is now top of most hospital CIOs' wish list, ahead of other applications, the report stated.

The research also indicated that hospital networking needs will spur spending on network upgrades and adoption of wireless LAN (WLAN). Today, most Chinese hospitals are already equipped with 100 megabits per second (Mbps) of broadband speed, but Springboard said IT spend will be accelerated when these hospitals upgrade to 1 gigabit per second (Gbps) and increased WLAN capabilities.

However, the report also illustrated that the utilization of IT to effectively manage hospitals is still largely lacking in the country and healthcare IT spend is far behind the scale mandated by the Chinese government.

Also, most hospitals are staffed by a small IT department, and most of these professionals do not have medical backgrounds, contributing to their lack of industry knowledge, Springboard noted.

To overcome the lack of IT manpower and expertise, the report pointed out that hospitals have resorted to outsourcing, particularly in the areas of application development, hardware maintenance and Web site construction and maintenance.

"The importance of more professional IT services, such as consulting and system integration, is expected to gradually rise, as hospital IT infrastructure becomes increasingly complicated with more applications," said Liu.

The analyst added that total outsourcing of hospital IT management "will be rare", as security remains the top concern in making such decisions.