Part - II

(To read Part I, click on the �Previous Article� link, on the left)

Based on the study conducted by MTIA and reported at its 2002 conference, the industry is valued around 10 to 15 billion dollars a year, out of which less than 1% of the work is estimated to be outsourced to offshore transcription companies. The value of the industry was calculated based on the estimated number of lines transcribed and an average rate per line.

The indications are that the need for transcription will continue to increase, at least for a foreseeable future, due to the following factors:
1. Stringent documentation guidelines and increased scrutiny by HHS OIG (Health & Human Services Office of Inspector General) for fraud prevention and detection
2. Electronic Medical Records � While most hospitals and clinics maintain electronic records, smaller facilities continue to handwrite documents. Compliance with regulatory requirements, efficient claims processing and critical information sharing are some of the compelling reasons for these facilities to seek transcription services and move from hard copy documents that are neither legible nor accessible.
3. Increased reliance on business process outsourcing � coding, billing, claims processing are often done by outside agencies and availability of supporting documents to facilitate this process will require that either computer-based patient record (CPR) systems are used or transcribed documents are made available electronically.

As hospitals continue to cut costs and focus on developing core competencies in healthcare, internal transcription services are a ripe candidate for outsourcing and remains a huge market yet to be tapped completely. Displacement of the employees from these facilities may increase the pool of available MTs to the service providers but retirement and career changes will result in net reduction of available transcriptionists.

The business case for offshore outsourcing

The following factors, in no specific order, make the business case for offshore transcription services:

� Labor cost
The labor cost advantage is not as substantial as it may appear initially. A potential 1:6 or higher, wage difference is often offset by drastic productivity reduction, cost of intermediary intervention (second level QC) in the US etc. Accounting for productivity reduction (as much as half) and adding additional cost of quality, will still make the labor cost a competitive advantage for offshore companies. Albeit the labor cost advantage may not be as great as it is touted, it is a significant factor in play, especially when we are dealing with high volumes.

� A low risk expansion model for scalability
The availability of vendors who have the infrastructure and investment for growth allows the existing companies to seek new opportunities. The risk of business expansion is transferred to entrepreneurs in offshore transcription companies.

� Availability of workforce
Mere availability of a huge young and unemployed people does not necessarily translate into the transformation of MTs overnight. Countries like India have demonstrated that there is a pool of educated individuals with the necessary basic language skills and the ability to commit to learn and progress. Early output from the offshore companies was plagued with problems such as misspelled names, misinterpretation of American expressions, incorrect grammar etc. However, over a period of time, many have used their experience wisely to overcome these hurdles and have demonstrated that they have the potential to groom good MTs through proper training. It is even safe to say that this young and dedicated workforce will not need another 20 years to be at par with MTs in the US. Inappropriate comparisons to native MTs in a 20-year-old industry and misrepresentations of offshore MT capabilities have often been issues that distort the picture.

� Technology
The Internet, high bandwidth and software solutions have been the enabling factors in reducing the distance and time difference between the US and the offshore companies at the other end of the world. For example, India benefited from the boom in the software industry and acquired the experience and technical expertise to work with clients in the US over the last decade. While several indigenous issues including cost and reliability of infrastructure (bandwidth, power etc.) have not been fully addressed in the foreign countries, the learning curve has been lot steeper in the technology area than with the training of MTs.

Continued�

(To read Part III, click on the �Next� link, below)


(c) Raj Krishnan
Director
Netrascribe