US software giant IBM Corp said Wednesday that China's planned 850-billion yuan healthcare system overhaul will generate at least US$1.5 billion in new spending in software, providing great opportunities for technology companies that have taken a beating in the current global economic downturn.

Matt Wang, vice-president of IBM's China Development Lab, said he expected at least 1,000 Chinese hospitals to invest a minimum of US$1.5 million each on software and related services in the coming years, encouraged by the government's investment plan.

"The government's involvement in healthcare sector reform creates huge market opportunities because it makes possible a nationwide and unified network that connects together the highly scattered Chinese hospitals," he said during an interview in Beijing.

"That will create both social and economic benefits to the country," he said.

China announced a plan to invest 850 billion yuan in its ailing healthcare system over the next three years that aims to provide every village with a medical clinic and at least one hospital for every county by 2011.

The plan also targets to build IT networks such as electronic records of patients and a medical record system that could be shared by different hospitals around the country.

Because of lack of facilities at local clinics, big hospitals in China, especially those in cities, often face a deluge of patients who should have been treated at county-level hospitals or community.

These patients, who come in for very minor health concerns, have crippled the workings of big hospitals, said Liu Fan, assistant president of Peking University People's Hospital, one of China's largest hospitals.

Liu said by establishing a network that connects hospitals and community clinics, patients could be guided to the nearest hospitals that best suit their need for treatment. Remote clinical processes through telemedicine will also be also through these networks, said Liu, whose hospital partnered with IBM in building a similar network that connects hospitals at Xicheng district in Beijing since 2007.

Liu said his hospital plans to spend about 10 million yuan every year on information technology facilities and related services in the next few years.

As the world's leader in healthcare software systems, IBM has provided electronic patient record systems and regional healthcare solutions for several US states. It launched an operational restructuring last year to focus more on specific industries such as energy and transport.

IBM yesterday launched a new industry solution lab in China focusing on the healthcare market and released four software solutions that could help hospitals establish electronic patient records at reduced costs.

Wang said the company hoped to become a "trusted adviser" to the Chinese government on the healthcare reform plan.

According to Wang Jun, vice-minister of finance, around 331.8 billion yuan out of the 850 billion yuan investment would come from the central government and the rest will be invested by local governments.

He said one-third of the total investment will go to hospitals and health facilities while the rest will be used mainly to improve the country's medical insurance system.

(China Daily April 9, 2009)