Exodus

By Jianggan Li | 27 July 2010 | Permanent link | 1 comment

The following has happened to many health IT vendors: big in the US and/or Europe, sound product with an excellent track record, started their Asian operations a number of years ago with high hopes to conquer this emerging market – and recently found their key executives in the region leaving. I don’t have to name specific ones – readers from the industry will know very well who I am talking about.

In contrast those for whom health is not core business are aggressive and prospering. Again, I don’t have to give specific names.

There are many factors contributing to this seemingly coincidence, but the long strategy or often, the lack of it, of many health IT vendors’ headquarters is certainly a key reason for many good people to depart.

HIT in the US is booming, especially since Dr Blumenthal, the current National Coordinator for Health IT, has been bestowed a strong mandate from the White House and billions of investments are pouring into electronic exchange of records.

And the business model of some US based health IT companies are reaping the benefits of this boom – their business model contributes to this as well.

In Asia, rarely a conventional hospital is able to afford a large dedicated customisation/maintenance team for specific systems, and the high cost which goes with it.

Therefore sales executives of these companies in Asia are at a naturally disadvantageous position – the biggest deals they can secure look very pale when compared with those sold by their colleagues in richer geographies. The more dollars you bring in, the more say you have in the company – that’s how capitalism works.

Public companies are bound by ROI pressure from their shareholders – so you know what the consequence is. These listed companies have less leeway as compared to private companies when it comes to audacious decision making.

Nevertheless, not all privately-held companies are leveraging this advantage they have: the way private companies’ decision making power is centralised means that if the key decision maker doesn’t understand the market, so is the whole company – that happens to a few privately-held companies as well.

Of course there are risks here – when you develop a Chinese version of your existing HIS/CMS package there is much more to be done than converting the script. The question is that whether you are willing to take those risks and whether you can see the potential rewards beyond them.

Unfortunately a few encounters told me that many are not yet to understand there is a difference between Asia and their home turf. If you come to a tertiary general hospital in China and talk to people there about improving appointment booking and complying with HIPPA – you are one of these.

And the few big IT companies venturing into healthcare, though having a hard time to get into the market, are clearly more determined and have a better long term strategy. Guess one big factor here must be their understanding of Asia and appreciation of differences through dealings in other sectors/verticals in the region.

In contrast to many who believe health IT has taken off in Asia, my take is that it is on the runway and about to take off. As a vendor, it is prime time for health vendors to establish themselves, leveraging their core expertise and working to reap part of the huge market in the future. A tiny few of them are doing an excellent job here – it is no harm learning from these ones.

Good health informatics professionals are scarce in the region – those who can sell are even fewer. So when you make up your mind, move faster before you lost all your good people to your competitors.

For hospitals, the phenomenon adds one more complexity when they choose a partner to work with. Nobody wants to end up in a situation where you have spent millions on a solution then the provider pulls out of the market you are in altogether. So choose wisely – it has to be someone who is adept in the field with a sound track record, with whom you can have the bargaining power, and ultimately who is committed to the region and willing to make changes to suit your needs.

P.S. my colleague Raphael Phang at FutureGov Research is currently leading his team on a study about the market, leveraging the contacts and relationships we have in the field – hopefully this will be useful reference for those of you who are struggling to put your case through to your boss in the corporate headquarters.