IBM has teamed up with the Apollo Hospital Group, a large hospital chain in India, to offer hosted software applications for mid-size hospitals in India.

This is a largely untapped market in the country, and the market opportunity is at least $300 million over the next four to five years, said Mohammed H. Naseem, vice president for healthcare at IBM India, on Thursday.

IBM will offer its hardware, middleware, and services infrastructure, while Apollo will offer its healthcare domain expertise, Naseem said. The applications will come from Apollo and independent software vendors (ISVs), he added.

In the first phase, IBM is doing about 20 pilots across the country. These will not be hosted centrally, but will be implemented at customer sites. The company will quickly move to a hosted model so that hospitals will not need to run their own IT infrastructure. "We need to have a hosted model to scale across the country, and for hospitals to get the benefit of lower costs," Naseem said.

Mid-size hospitals are willing to spend increasing revenues on software applications that will enable them to gain a competitive advantage, Naseem said. They are currently facing competition from large hospitals, and are also not able to price their services as high as those of the larger hospitals. With IT, a significant portion of their cost will be shaved off, he added.

The initiative, called Health Hiway, will also target physician practices, pharmacy and third party administrators who will benefit from the array of services with minimal investment, IBM said.

The multiplicity of players in the healthcare industry like providers, payers, pharmaceutical companies has created the need for a technology interface for interoperability and portability of patient data between service providers and payers to ensure quality of clinical care, as well as cost effective third party claims processing, IBM said.

Other than a few large hospitals in India that have successfully implemented IT, most seem to be grappling with too much choice and very little understanding to evaluate the options, Naseem said.

The current applications to be made available to users include revenue management applications that allow the hospital to automate their revenue generation processes, and also to identify new revenue streams, hospital enterprise resource planning (ERP), learning management, health insurance claims processing, and performance management, including decision support and knowledge management.