Part - III

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

Currently the offshore transcription business has evolved into several business models and can be broadly categorized into:

� Direct Subcontracting from existing Transcription companies:

In this model, the transcription companies in the US establish a direct partnership with one or more offshore companies and use them as an extension of their service. In this scenario, the offshore companies do not deal with the ultimate end user and works under the umbrella of the transcription companies.

� Direct marketing to end users in the US, based on offshore transcription resources:

Several new transcription companies have appeared in the market place led by entrepreneurial immigrants to capitalize on this opportunity. They either have their own transcription facilities or use middlemen in their country of origin to coordinate the distribution and delivery of work. Some of the existing major American players have also adapted this strategy and set-up numerous facilities in countries like India and Philippines.

� The Aggregators or middlemen:

This is perhaps one of the most controversial models that has impacted the offshore transcription business significantly, particularly in India. In this scenario people with a presence, connections and some field experience in the US, market the transcription services and use other middlemen or deal with transcription companies in the foreign country to get the job done. In its worst form it has a long chain of intermediary players � Client / the US transcription companies / the US aggregator / foreign country aggregator / consultants / investors / transcription companies � resulting in a complex profit-sharing and delivery model.

Inexperienced new entrants, competition among these players and their eagerness to penetrate market early have resulted in a shaky start for all the offshore companies and disturbed the often small and conservative small businesses in the local transcription industry. One of the aftermaths has been the reduction in the market value for transcription services to unsustainable level. End users who were pursued to make the switch were also in for a shock when they realized that the new players are not ready to deliver the quality of work they have been accustomed to or have the infrastructure to provide the crucial local support. As it is normal in an industry, when the door opens to new players, confusion prevails and when the dust settles, the true market forces emerge and prove the viability of each business model.

In this early battle there have been several casualties, worst of which has been the �wannabe medical transcriptionists� in the foreign countries, who were lured into this profession with a promise of a bright career. Well, that is a topic for another discussion.

The difference between MT outsourcing and other trades

As a consumer in the US, it is hard to find a store that does not sell goods manufactured in a foreign country in every category of products. It was Taiwan that came to the rescue when everyone decided to display the US flags everywhere after the 9/11 incident. A delay or discrepancy during a milestone review in a outsourced high cost IT project is often accepted and corrected by assigning additional resources or penalty clauses; the business then continues.

With medical transcription, every document you do is critical not because of its monetary value but because of its context, use and criticality. There is no room for error or way to recover from an error.

To some extent it is like making doughnuts. It has to be made everyday and made fresh. But the similarity stops there (even the per unit margin is higher in the doughnut trade). In medical transcription, when you find a bad report, you cannot throw it away and replace it with a new one. Unlike durable goods or IT outsourcing, there is no single specification or design that can be used to check quality or ensure consistency of the final outcome in MT.

Regulatory compliance such as HIPAA privacy rules, handling of PHI (Protected Health Information) and malpractice insurance liability add complexities that were not present in the other trading and outsourcing models.

Continued�

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


(c) Raj Krishnan
Director
Netrascribe