Importance of a Comprehensive Adoption Decision in the Presence of Perceived Opportunities: The Testresults Case

Importance of a Comprehensive Adoption Decision IDEAThe GROUP PUBLISHING 701 E. Chocolate Avenue, Suite 200, Hershey PA 17033-1240, USA Tel: 717/533-8845; Fax 717/533-8661; URL-http://www.idea-group.com

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The Importance of a Comprehensive Adoption Decision in the Presence of Perceived Opportunities – The TestResults Case Pankaj Bagri Indian Institute of Management Bangalore (IIMB), India L. S. Murty Indian Institute of Management Bangalore (IIMB), India T. R. Madanmohan Indian Institute of Management Bangalore (IIMB), India Rajendra K. Bandi Indian Institute of Management Bangalore (IIMB), India

EXECUTIVE SUMMARY This case discusses the adoption of an e-business initiative by Ashvini Hospitals Group (AHG), a leading integrated healthcare provider in India. It illustrates how adoption decisions are motivated by bandwagon effects and result in a non-comprehensive adoption plan, which results in unforeseen problems later on. The initiative, Testresults, was aimed at enhancing the services offered to patients, and in the process, also provide significant benefits to two other initiatives of the organization. However, a change in the fortunes of those initiatives led to a lack of motivation for AHG to continue Copyright 2004, in Idea Copying or distributing in print or electronic without written This chapter ©appears theGroup book, Inc. Annals of Cases on Information Technology 2004,forms Volume 6, edited by permission of Idea Group Inc. is Mehdi Khosrow-Pour. Copyright © prohibited. 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

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with Testresults, even though the service required very little investment of any kind and was technologically quite simple. The case also demonstrates how, in the absence of formal contracts between organizations involved in the adoption process, coordination may become a casualty when there is a change in motivation of one or more parties. Finally, the case also highlights the importance of creating clear value propositions for internal as well as external stakeholders in order to get the required cooperation.

THEORETICAL BASIS FOR THE STUDY The literature on adoption of technology innovations suggests that IT acquisition and implementation is a complex process that cannot be understood without careful attention to the individual, organizational, technological and environmental context within which it takes place (Carter et al., 2001). Adoption of innovations by organizations has been typically viewed as a three-stage process – initiation, adoption, and implementation (e.g., Rogers, 1995). Initiation includes pressures to change, and gathering and evaluation of information, which leads to the adoption stage. Adoption involves the decision to commit resources to the innovation. Finally, implementation includes development and installation activities to ensure that the expected benefits of the innovation are realized. Many management scholars believe that the process used to make strategic decisions affects the quality of those decisions in terms of their comprehensiveness in addressing various issues (Fredrickson, 1985). Studies in both organization innovation and IT literature have found that a well-developed investment rationale is more likely to enable firms to assimilate technological innovations (Dougherty & Hardy, 1996; Van de Ven, 1986). It is also important to understand the events in the initiation stage, or the motivation behind adoption, as the literature on strategic decision-making suggests that differences in motivation impact the comprehensiveness of the decision-making process. Much of the early work (Cyert & March, 1963; Ansoff, 1965) has focused on how a strategic-level decision is motivated by the managerial perception of problems facing an organization. However, a strategic decision process may also be motivated by proactive, opportunity-seeking behaviour or by the personal interests of powerful members of the organization (Fredrickson, 1985). Thus the initial stimulus for the decision process can lie anywhere on a continuum having opportunity at one extreme and crisis at the other, with problem lying somewhere in between (Mintzberg et al., 1976). In the specific context of technology adoption, an opportunity-based motivation is similar to the “technologypush” (TP) concept, whereas a problem-based motivation is similar to the “need-pull” (NP) concept (Chau & Tam, 2000). A TP adoption may often be the result of the bandwagon effect, defined by Abrahamson & Rosenkopf (1993) as the pressure to adopt or reject an innovation, created by the sheer number of adopters or rejecters. A bandwagon is said to occur when certain organizations adopt an innovation because of such pressures, rather than their individual assessments of the innovation’s efficiency or returns. As Porter (2001) puts it, “It is understandable, when confronted with a new business phenomenon, to look to marketplace outcomes for guidance. But in the early stages of the roll out of any new technology, market signals can be unreliable.” It is important to understand the difference between opportunity-motivated decisions and problem-motivated (or crisis-motivated) decisions, since research suggests Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

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that managers follow different decision-making processes in the two cases. Fredrickson (1985) posits that decision makers respond more comprehensively and rationally to problem situations because they perceive the situations as having potentially negative effects on the organization. However, opportunities are seen as providing unexpected benefits and hence the associated decision process is often characterised by lack of use of formal, analytical decision aids. Zmud (1984) notes “need-pull innovations have been found to be characterized by higher probabilities for commercial success than have technology-push innovations.” The literature on adoption of IT-based innovations has identified a number of factors that impact the extent to which the adopting organization is able to reap the benefits of the adoption. The degree of comprehensiveness of the adoption decision is then a function of the extent to which these factors have been taken into consideration while evaluating the proposed adoption. Organizational capabilities like availability of slack resources (Armstrong & Sambamurthy, 1999), a sophisticated IT infrastructure (Broadbent et al., 1999) and high linkage between business and IT objectives (Reich & Benbasat, 1996) have been found to be positively associated with a successful adoption. In case the initiative involves external entities, a key interorganizational factor is the extent to which the partner organizations are dependent on the adopting organization, as it determines the extent to which the latter can dictate terms during the adoption (Premkumar & Ramamurthy, 1995). Even if the partner organizations are willing to cooperate in the adoption initiative, their actual ability to do so will depend on their readiness in terms of financial, personnel and technical capabilities (Chwelos et al., 2001). The decision to undertake a particular initiative should then be taken only after these aspects have been given due consideration and found to be favorable, or alternately, amenable to remedial actions. This study is an attempt to demonstrate the importance of initiation and adoption stages in determining the ultimate outcome of a technological adoption. It chronicles the adoption of an e-business initiative at a large healthcare organization and attempts to understand the unfolding of the adoption process by examining the motivation of various players involved and its impact on the decisions taken during the course of the project. The study also demonstrates how a lack of comprehensive analysis during the adoption decision-making can result in unforeseen problems during the implementation or even the operation of the adopted system and negate the benefits attained by the adoption.

ORGANIZATION BACKGROUND Ashvini Hospitals Group (AHG) is a leading integrated health care provider based in India, with presence in several industry segments like hospitals, pharmacies, medical equipment, medical education, health insurance, and hospital project management and consultancy services. AHG was incorporated in late 1970s as a public limited company and is today the only corporate player in India with a nation-wide (and even overseas) chain of hospitals. It is also one of the few publicly listed hospital companies in India. AHG is considered the largest integrated healthcare delivery organization in Asia, and is an acknowledged leader in the hospitals segment in India. Appendix 1 provides a brief description of the healthcare industry scenario in India.

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AHG hospitals are classified under two heads – AHG-owned hospitals and AHGmanaged hospitals. The former are owned and controlled by AHG, while the latter are built as well as managed by AHG for external entities that make the investment required for the project. At the time of writing, AHG has 35 hospitals, out of which 22 are owned by external entities. The organization structure of AHG is shown in Appendix 2. The various businesses under AHG are managed by CEOs, who report to the board of directors. Operationally this translates into each CEO reporting to a particular member of the board who is responsible for the performance of that particular unit. The three largest hospitals of AHG (in terms of bed capacity) are in New Delhi (695 beds), Chennai (610 beds) and Hyderabad (350 beds). Consequently, these three centers are also the management hubs of AHG, with Chennai being the corporate headquarters. For the purpose of this case, the unit of interest is mainly Ashvini Hospital Hyderabad (AHH). The CEO of AHH reports to the Director (Operations) of AHG, who is based in Hyderabad. The organization chart of AHH is shown in Appendix 3. It is typical of the other large AHG hospitals. The smaller ones have less number of departments and report to the CEO of one of the larger hospitals, rather than to the board of AHG. There is a strong emphasis on having proper systems in place and on standardizing various operating procedures so as to deliver consistent experience to a patient at any and all the Ashvini facilities, owned as well as managed. Consequently, proper reporting systems are in place and the CEO closely monitors the day-to-day operations at the hospital. At AHH, the CEO meets all the department heads (medical as well as nonmedical) every morning at 10 a.m. for a review of the previous day’s work and to resolve any inter-departmental disputes, etc. This ritual, known as “morning meeting,” has become institutionalized at AHH and is looked upon by several department heads not just as a reporting activity but also as a forum for discussing wide-ranging issues impacting various aspects of the hospital’s functions. The department heads manage the affairs of their departments without interference from the CEO. Any changes in the existing procedures are discussed in the morning meetings, especially if they impact other departments. There is very little autonomy at the lower levels, where the emphasis is on uniform patient-care standards and formal procedures. The job roles at these levels are typically well defined. In keeping with most Indian companies there is a high degree of job security. For example, when a business that was not performing too well underwent a major reorganization recently and its staff strength was significantly reduced, all the redundant employees were absorbed in other businesses of AHG.

SETTING THE STAGE AHG was an aggressive user of information technology (IT) with the aim of improving the quality of healthcare provided to its patients as well as creating a strategic advantage over its competitors. It was one of the pioneers in using telemedicine in India, and had recently launched the first rural-to-urban telemedicine facility in India. It was also a promoter of Fortress Health Limited, a Hyderabad-based software company specializing in healthcare informatics. Fortress developed a Hospital Information Systems (HIS) – enterprise software catering to hospitals – which was being implemented across several AHG hospitals all over the country, including AHH. The IT department at AHH consisted of about seven people, and was headed by a manager who reported to the CEO. The IT Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

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manager, a chartered accountant, had been with AHG for more than a decade in various capacities, and was especially brought in by the top management to head the HIS implementation process due to his knowledge of work processes in the hospital. The boom of Internet-based business models in the late 1990s prompted AHG to identify ways in which it could leverage its strong brand value and IT usage culture to exploit the potential offered by the emerging web technologies. It appointed a leading international management consultancy to chart a roadmap for AHG in the web arena. The outcome of this process was the incorporation of Ashvini Health Systems Limited (AHSL) in 1999 to spearhead AHG’s healthcare portal – Ashvinihealth.com. Launched in August 2000, Ashvinihealth.com was envisaged to be a healthcare platform integrating various stakeholders in the healthcare industry – patients, doctors, insurance companies, medical students, corporate/large employers, and hospitals – under one umbrella. It was touted as neither B2B nor B2C, but “P2P (path-to-profitability) based on PRM (Patient Relationship Management).” The Director (Operations) of AHG was appointed the managing director of AHSL, while the executive responsibilities were assigned to a CEO. In terms of organization culture, AHSL was significantly different from AHH. The atmosphere was more like that of a new economy startup (which is what it was) than a hospital. There was significantly less emphasis on formal procedures and reporting mechanisms, and employees at all levels were encouraged to accept new responsibilities, make suggestions, etc. Like so many other new economy organizations, stock options were part of the compensation package for most employees. Even though AHSL and AHH were located in the same premises, and were headed by the Director (operations) of AHG, the relations between the two were not exactly cordial. As one senior manager at AHSL put it, there was a bit of resentment among AHH managers that “while we earn the money, these fellows just spend it.” However, since both organizations largely functioned independent of each other, this was not a significant operational issue.

CASE DESCRIPTION Project Testresults envisaged creating a web-based service for the outpatients at various Ashvini facilities by virtue of which the reports of various laboratory investigations for a patient would be made available online. The patient could log in to a particular website and check the results of the investigation by using a login identifier and a password. The login identifier was the Personal Health Identifier (PHI) provided by all Ashvini hospitals to each patient at the time of registration and was meant to be unique to the patient and last for the patient’s lifetime. A brief description of the PHI project is provided in Appendix 4. The password was also generated at the time of generation of PHI, and the patient was advised to change it as soon as possible to prevent any misuse. The service was offered free to the patients, but the option of charging them some nominal amount at a later date was not ruled out. The approach was to wait and see how the service picked up and then decide on future course of action. The idea of Testresults originated at Fortress, which proposed it to AHH sometime during the year 2000. At this time, Fortress’s flagship product, its HIS software, was being implemented at AHH and, like so many new products, was experiencing teething troubles. Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

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For Fortress, the success of a project like Testresults would be a showcase for its capabilities in the HIS domain, in terms of extracting data from an internal system and then making it available over a network (intranet, extranet, Internet). The concept of Testresults appealed to AHG for several reasons. One, it fit in well with AHG’s projection of itself as being techno-savvy and at the forefront of using technology to provide superior healthcare solutions. Testresults would be a new feather in its cap, enhancing patient care by not only saving the patient time and travel cost, but also allowing her “to show the results to her doctor son sitting in the US.” At the same time, Testresults could also play an important role in two other pet projects of AHG – the PHI scheme, and Ashvinihealth.com. Testresults could be used as a proof-of-concept for PHI, as a patient would need to use her unique PHI and password to access the results. Smooth functioning of the site would demonstrate the benefits of not only a service like Testresults, but also how PHI could make it operational, while also allaying fears over privacy and security issues concerning availability of personal data in a public domain. Finally, Testresults could also be used to drive traffic to Ashvinihealth.com. A link was to be provided on Ashvinihealth.com site to the Testresults site. This was expected to generate traffic for the Ashvinihealth.com site. The primary interest for AHSL was the involvement of Ashvinihealth.com in the project. Testresults would be a “need-pull” application that would motivate patients (and their relatives) to visit the Ashvinihealth.com site. Further, there was a revenue generation opportunity for the company, as it was to be paid Rs. 2 (by the hospital where the patient had undergone tests) for every patient record uploaded. The first hospital where Testresults was initiated was AHH, since the HIS implementation here was at an advanced stage. The lab records pertaining to the outpatients were to be obtained from the HIS, converted into database files using an application program, and then uploaded on the server. The periodic generation of database files and uploading of these files was the responsibility of the staff in the IT department. Apart from IT, no other department of the hospital was involved in the project, though the laboratory and the reception staff were informed about the initiative to enable them to answer any patient query regarding the availability of the service. AHSL was given the responsibility of promoting Testresults as a part of their marketing for Ashvinihealth.com. Fortress’s involvement in the project was confined to designing the application program that would generate database files from the HIS, and hosting the Testresults website. Testresults started operations in October 2000. AHSL started promoting the service along with its promotion of Ashvinihealth.com. The total investment in the project was very small, as there was a lot of sharing of existing resources (rather than acquisition of new ones), and the main spending was on application development and on hosting the service. While there were no exclusive measurement systems in place to find out how many of the outpatients who were informed about the facility actually used it, AHSL could measure the traffic to the site based on the number of visitors to the Ashnihealth.com site who clicked on the Testresults link. However, this would not take into account the visitors who directly visited the Testresults site. Testresults experienced its first major problem on September 15, 2001, when the server hosting the site (belonging to Fortress) crashed, and the service went out of operation. What should have been a routine salvage operation (in restoring the service) however became a long game of passing the buck between AHH, AHSL and Fortress,

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which went on for five months. When asked as to what happened during this period, the most common response was, “nothing.” This was the view of the CEO of AHSL, VP (IT) of AHSL, ex-CEO of Fortress, and the IT manager at AHH. On probing more, all admitted that this was the period of determining the “ownership” of the project. After having started with coordinated efforts of three entities, Testresults was suddenly without a parent. Fortress had undergone major changes since the project had started. In February 2001, it formed a joint venture with a leading multinational medical informatics organization, and formed Med-Tech India Ltd. Med-Tech took over the HIS business of Fortress, while the latter concentrated on developing software for the health insurance segment. Fortress’s CEO and the HIS team moved over to the new organization and focused on the HIS business. On the face of it, the formation of Med-Tech should not have impacted Testresults, as the composition of the team involved in the HIS implementation at AHH did not undergo any major change. What was needed was a communications channel between the implementation team (now belonging to Med-Tech) and the person(s) responsible for the Testresults application program at Fortress, so that any change in the lab module could be examined for its likely impact on Testresults. This however did not happen. Fortress itself was undergoing turbulent times after the sale of its main business and was trying to rediscover itself. The main developer of the program had left Fortress within a few months of the formation of Med-Tech. Besides, the successful operation of Testresults for almost a year was a good enough proof-of-concept for the HIS package. Consequently, there was no one at Fortress or Med-Tech with responsibility towards Testresults. AHG meanwhile had suffered setbacks in both PHI as well as Ashvinihealth.com initiatives. The former was plagued with legal, social and ethical issues regarding availability of a patient’s health data in a public domain. It also faced resistance to adoption by other private hospitals not affiliated to AHG, which did not see much immediate value in such a scheme. Also, the health insurance sector, which had recently been opened up for private companies, was not witnessing much action. Consequently, the usage of PHI was restricted mostly to various AHG facilities, which, however, were using it faithfully. The dot-com bust also moderated AHG’s expectations from emphasis on Ashvinihealth.com. The number of patients checking their results on the Testresults site was also not very significant when compared to the overall patient volume. As a result, for both AHG as well as Fortress, Testresults wasn’t exactly a high-priority item in September 2001. At AHH, the only department that was associated with Testresults was IT. However, Testresults-related activities were only a small component of the various tasks of the department. The IT manager was not a great believer in the service, viewing it as an unnecessary expenditure making no significant contribution to AHH or AHG. In the absence of any pressure from the top, the IT department was not particularly perturbed about the service not being available. Things were, however, different from the perspective of AHSL. The dot-com bust (and the consequent drop of plans for a $300 million NASDAQ listing) forced it to drastically alter its business plan and expand its scope of activities to leverage the strength of the brick-and-mortar presence of its parent. Among the activities it identified as having strong potential for growth was implementation of HIS software at hospitals.

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It was able to negotiate an arrangement with Med-Tech and became an exclusive implementation partner for the latter’s HIS package. It also sought to augment its services by offering a Net-to-Enterprise Integration (NEI) service. NEI can be envisaged as an application that uses the data captured in the HIS to offer several services like online appointments, registration, insurance claims processing, etc., on the Internet. The idea was to enable the users to “seamlessly connect between online and offline offerings” (Net to Enterprise). With the disruption in Testresults, there were two causes of immediate concern for AHSL. One, patients who did try to access their results on the site were disappointed and some of them sent mails to Ashvinihealth.com complaining about the unavailability of the service. And two, AHSL was losing out on revenues – Rs. 2 per patient record at an average of 350 outpatients a day translated into approximately Rs. 20000 ($400) a month, a paltry sum but still adding to a not too great topline. Hence AHSL was more interested than the other parties in getting the service restored. However, as mentioned before, no one was willing to accept responsibility for the project. The IT-department pleaded helplessness as Fortress’s servers were experiencing intermittent outages. Fortress was busy with its own problems (including the servers) and Testresults did not figure particularly high in its list of concerns to be addressed. AHSL wanted the service to be restored as soon as possible but did not have any authority on the matter. Somewhere during this period, the top management at AHSL came up with the idea of projecting Testresults as a demonstration for its NEI capabilities. While the benefits of HIS were more readily accepted by a potential client, the same was not the case with NEI, especially in the case of AHG-managed hospitals (i.e., those where AHG ran the operations but did not own the facility). AHSL had been looking for an easily demonstrable proof-of-concept for NEI - just to show how data from HIS could be captured and put on the web (basically any network) — and Testresults seemed to fit the bill. AHSL perceived the glitches in Testresults as being related to supporting infrastructure issues (in this case, the server), and felt that if it could provide the necessary infrastructure, running a site like Testresults would be pretty simple. Hence, it was in February 2002 that AHSL decided to take over the responsibility of hosting Testresults on its own server. This was more of a verbal agreement between AHH and AHSL and did not involve any formal handing over of charge from Fortress, or any clear demarcation of responsibilities between AHSL and the IT department of AHH. It was assumed that once the problems were addressed, the IT department would take responsibility for generating the data files from the HIS and uploading them. However, Testresults continued to be plagued with several problems resulting in frequent shutdowns. On March 9, an error occurred during uploading as the structure of data tables in the HIS had changed. Between March 12 and March 17, no data was uploaded, as there was confusion between AHSL and AHH IT staff regarding the responsibility of uploading data. While AHSL was of opinion that it had handed over the job to the IT department after rectifying the previous error, the latter claimed it was still AHSL’s responsibility. On March 18, there was an error while generating the database files to be uploaded, as special characters had not been handled. On March 19, there were problems with file size while generating the database files. Finally, AHSL decided to suspend the service indefinitely and tackle the problem at its root – the application program converting HIS data into database files. It decided

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to form a team comprising of members from AHSL as well as the developers of the original program, and rewrite the program keeping in mind the changes in the HIS. However, the person who had written the application program had quit Fortress. Consequently, AHSL formed a team with some developers of Med-Tech having the knowledge of the laboratory modules of the HIS, and completely rewrote the application program. It started generating data files and uploading them on May 10, 2002.

CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION At the time of the study (June 2002), the IT staff at AHH is doing the same. However, a formal handover of responsibility from AHSL to the IT department has not yet taken place due to certain objections raised by the IT manager regarding allocation of costs for the service, continued role of AHSL, the basis for per-record payment of Rs. 2 to AHSL, among others. He expressed strong reservations about the value for AHH or AHG from Testresults, and felt that only AHSL would benefit from it. Many technology adoption projects suffer from starting troubles before achieving some degree of stability, or getting abandoned by the adopting organization. However, in case of Testresults, the service operated smoothly for almost a year, before it suffered a breakdown due to technical reasons. But the disruption lingered for almost nine months, and for reasons that had very little to do with technology. Why was this allowed to happen by the top management at AHG? Is the service entirely without value for the organization? Was the initial decision for adoption an ill-considered one? Was the HIS at AHH stable enough to support the service? What can AHSL do to convince AHG about the benefits of the service?

REFERENCES Abrahamson, E., & Rosenkopf, L. (1993). Institutional and competitive bandwagons: Using mathematical modelling as a tool to explore innovation diffusion. Academy of Management Review, 18 (3), 487-517. Ansoff, H.I. (1966). Corporate Strategy. New York: McGraw-Hill Book Co. Armstrong, C.P., & Sambamurthy, V. (1999). Information technology assimilation in firms: The influence of senior leadership and IT infrastructure. Information Systems Research, 10 (4), 304-327. Broadbent, M., Weill, P., & St. Clair, D. (1999). The implications of information technology infrastructure for business process redesign. MIS Quarterly, 23 (2), 159-182. Carter Jr., F. J., Jambulingam, T., Gupta, V.K., & Melone, N. (2001). Technological innovations: A framework for communicating diffusion effects. Information & Management, 38 (5), 277-288. Chau, P.Y.K., & Tam, K.Y. (2000). Organizational adoption of open systems: A ‘technology-push, need-pull’ perspective. Information & Management, 37 (5), 229-239. Chwelos, P., Benbasat, I., & Dexter, A.S. (2001). Research report: Empirical test of an EDI adoption model. Information Systems Research, 12 (3), 304-321.

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Cyert, R.M., & March, J.G. (1963). A behavioural theory of the firm. Englewood Cliffs, N.J.: Prentice-Hall. Dougherty, D., & Hardy, C. (1996). Sustained product innovation in large mature organizations: Overcoming innovation-to-organization problems. Academy of Management Journal, 39 (5), 1120-1153. Fredrickson, J.W. (1985). Effects of decision motive and organizational performance level on strategic decision processes. Academy of Management Journal, 28 (4), 821-843. Mintzberg, H., Raisinghani, D., & Theoret, A. (1976). The structure of “unstructured” decision processes. Administrative Science Quarterly, 21, 246-275. Porter, M. (2001). Strategy and the Internet. Harvard Business Review, 79 (3), 63-79. Premkumar, G., & Ramamurthy, K. (1995). The role of interorganizational and organizational factors on the decision mode for adoption of interorganizational systems. Decision Sciences, 26 (3), 303-336. Reich, B. H., & Benbasat, I. (1996). Measuring the linkage between business and information technology objectives. MIS Quarterly, 20 (1), 55-81. Rogers, E.M. (1995). Diffusion of Innovations (4th ed.). New York: Free Press. Van de Ven, A.H. (1986). Central problems in the management of innovation. Management Science, 32 (5), 590-607. Zmud, R.W. (1984). An examination of push-pull theory applied to process innovation in knowledge work. Management Science, 30 (6), 727-738.

APPENDIX 1 The Indian Healthcare Industry Traditionally, the healthcare sector in India has been dominated by a combination of smaller nursing homes, charitable hospitals, and government hospitals. However, the scenario is changing with a number of corporations like Fortis, Max, Wockhardt, Escorts, and the Aditya Birla group entering the healthcare sector in a big way. Several hospitals set up under the Charitable Trust Act have developed as major centers. AHG is the only corporate player with a chain of hospitals today. The main factor driving the overall sector growth is the demand supply gap. According to the World Health Organization (WHO), India needs to add 80,000 hospital beds every year for the next five years to meet the demands of its population. The demand supply gap is evident from the capacity utilization figures: against the international average of 40-50 per cent, well-managed Indian hospitals have a high 85-90 per cent occupancy rates. Although about 68 per cent of the hospitals are in the private sector, in terms of bed capacity, nearly 60 per cent is in the public (government) sector. However, people prefer to use the private sector facilities. The privatization of health insurance is expected to bring in structural changes and demand for quality services. In India, the coverage of health insurance is one of the lowest in the world. More than 80 per cent of the expenditure on healthcare is “out of the pocket.” As health insurance companies start funding a larger percentage of healthcare costs, they are expected to have a major say in the running of the healthcare system in general, and hospitals in particular. This may include imposing caps on the amount they would reimburse for particular procedures, room charges, etc. There will be a lot of

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emphasis on standardization of facilities not only within a hospital or within a group of hospitals, but across groups of hospitals. Information technology will play a big role in this. (Source: The ET Knowledge Series – Healthcare, 2001-02)

APPENDIX 2 AHG Organization Structure Chairman

Managing Director

Director (Finance)

CEO (Projects)

Director (Operations)

CEOs (Hospitals)

Group President

CEO (AHSL)

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APPENDIX 3 Organization Structure of Ashvini Hospital Hyderabad Director (Operations)

CEO

Dy. GM Human Resources

Director (Medical Services)

Dy. GM – Operations.

Manager – IT

Medical Superintendent.

RMO

Consultants

Resident Doctors

Radiology

Lab & blood bank

Nursing Superintendent.

APPENDIX 4 About Personal Health Identifier Personal Health Identifier (PHI) was a “part philanthropic, part strategic” initiative of AHG, which, in its grandest form, would equip each and every Indian with a unique identifier. Using this identifier (and with a little help from emerging technologies), a person would be able to seek medical care at any of the affiliate hospitals in the network created by AHG. The network would include not just hospitals, but also other players like health insurance providers, pharmacies, etc. The patient would be identified by her PHI and her medical records would be available on a network-wide extranet (if not the Internet), resulting in not only faster medical care but also attendant facilities like processing of insurance claims for the hospitals. At the time of its launch in August 2000 Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

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(along with the launch of Ashvinihealth.com), AHG had plans to link up to 450 private hospitals in India to accept the concept of PHI.

BIOGRAPHICAL SKETCHES Pankaj Bagri is a doctoral candidate at Indian Institute of Management Bangalore (IIMB), India. He also holds a Post Graduate Diploma in Management (equivalent to an M.B.A.) from IIMB, and has worked in the financial services sector for two years. His research interests include the adoption of IT-based innovations, organizational development and change management. L. S. Murty has a bachelor degree in Mechanical Engineering (from JNT University, India) and doctoral degree in management (from Indian Institute of Management Ahmedabad, India). Currently, he is Professor of Operations Management at Indian Institute of Management Bangalore, India. He worked in aerospace industry before moving into academia. During his fifteen years of teaching experience, he has taught in graduate and doctoral programs in management and executive education programs. His research interest is in the field of planning systems (MRP, MRP II, ERP), and other interests include teaching methodology and research methodology. T.R. Madanmohan is an Associate Professor of Technology and Operations at the Indian Institute of Management Bangalore, India. He also holds an Adjunct Research Position at Carleton University, Canada. His areas of research interest include evolution of e-com business models, competitive agents, online auctions rules, standard setting and technology communes, and strategic behavior in pharmaceutical industry. He has published over twenty articles in journals such as International Journal of Technology Management, International Journal of Technology Transfer and Commercialization, Technology Analysis and Strategic Management, Productivity, and a book published by Kluwer Press. Rajendra K. Bandi is an Associate Professor (Information Systems) and Chairperson of the Center for Software Management at the Indian Institute of Management Bangalore, India. An engineer by training, he received a Ph.D. degree in business administration (Computer Information Systems) from the Robinson College of Business, Georgia State University, Atlanta, U.S.A. His research interests are in Social Impacts of Computing, Knowledge Management, IT in Government, Software Engineering, Object-Oriented Systems, and Software Development Process Models. He has published/presented several research papers at various international journals and conferences such as the IEEE Transactions on Software Engineering, International Conference on Object-Oriented Programming, Systems, Languages & Applications (OOPSLA), International Academy for Information Management, International Conference on the Impact of ICT Applications on Relocation of Work, Working Conditions and Workers, etc.

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