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Challenges for the Healthcare Outsourcing Industry

Apr 29, 2011 - 0 comments





Medical transcription


medical practices


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The healthcare outsourcing industry is gearing up some significant change. A big driver is the ongoing healthcare legislation including the Patient Protection and Affordable Care Act (PPACA), the Health Care and Education Reconciliation Act of 2010 (HCERA) and allied reforms such as the American Recovery and Reinvestment Act of 2009 (ARRA) that indirectly affect social benefits such as healthcare. The most visible impact of these reforms is a likely increase in number of persons added to healthcare through insurance coverage. Secondly, technological changes including mandatory implementation of electronic health records as well as changes to existing medical code standards will affect the way healthcare providers’ processes.

Every participant in the healthcare industry stands to be affected by these changes. Hospitals, medical practitioners, and drug manufactures will need to be prepared for increased cost and capacity pressures. Insurance providers need to look at ways to handle increased volume pressures and reduce processing costs, and outsourcing and technological providers need to look at opportunities that can maximise efficiencies and reduce costs for their clients. The following are some of the key areas which hold specific significance to the healthcare outsourcing industry

1. Anticipation of increased volumes

Legislative changes in healthcare which includes the PPACA is expected to add (conservatively) ~ 30 million more people into the insurance system. As a result, there will be increased registration, process documentation and claims – each with immense potential for outsourcing.

The US healthcare system is one of the most expensive in the world (its annual cost of healthcare per capita is $5,711 or 15% of GDP compared with 7-10% in most of the developed world) makes its players and participants increasingly favor low cost efficient options like outsourcing. Other reasons why US healthcare providers seek outsourcing is the want of a specialized taskforce. An aging demographic, not only causes increased demand for healthcare, but also results in a paucity of available experts.

One instance of regulatory changes causing an increase in healthcare outsourcing is the ICD 10 conversion change which is expected to impact the medical coding industry and is likely to spur a great demand for outsourcing this particular function of healthcare. ICD-9 system is an International Coding System (ICS), currently used in the United States, which enables providers to code specific diagnoses. Most countries (~240) follow the ICD guidelines/manuals for healthcare record keeping and several countries have already converted to the ICD-10 system. For healthcare providers ICD 10 is due to be implemented from October 1, 2013 – and this regulation is the trigger of several changes that are occurring in the revenue cycle management industry particularly. Most coders are conversant with ICD 9 and would find it difficult to adapt to the new ICD 10 regulations since(the number of medical codes are expected to go up from  18,000 to at least 64,000. Even if they do upgrade, there are not likely to be as many coders to suffice the increased demand expected in the coming 2-3 years.

2. Technological developments and impact

Apart from the disruptive effects of technology on the medical transcription and billing and coding business, constant changes in technology affect delivery for the healthcare providers as well as service delivery of outsourcing vendors. Healthcare providers are increasingly looking at integrated solutions to facilitate their client’s healthcare needs, decrease healthcare costs, and improve efficiencies. Outsourcing vendors are making use of technology as a platform around which they could offer their service. So where a traditional outsourcer would provide data entry / back end services, his current offerings could include an integrated technology platform that supports the service, such as a virtual receptionist / scheduler, followed up with a voice service that confirms the appointment with the healthcare provider’s client.

In conclusion, each of these changes holds a sea of opportunity for all participants in the healthcare industry. Outsourcing vendors can chose to grab the bull by its horns and translate the challenge into opportunity. There are several ways in which this can be achieved, increasing productivity internally, optimizing technology  or using a radical new disruptive solution.

3. End of the Medical Transcription boom?

As most healthcare outsourcing providers already know, the medical transcription (MT) boom phase is over. Speech recognition technology, being used by most healthcare providers has resulted in shrinking the requirement of a medical transcriptionist’s skills to 20-30% of its original requirement.

However, this is not true for the healthcare outsourcing industry as a whole. As we see it, the opportunities have simply moved up the value chain for healthcare outsourcing.  A visible shift in the nature of services within the MT industry is expected. About 70-80% of all MT basic MT jobs (comprising transcription and data entry) are expected to translate into higher level jobs comprising editing, checking, supervision, billing and coding requirements.

Overall volumes received from the healthcare providers will increase – although billing rates are expected to remain constant. This is likely to impact operating margins for outsourcing providers who will be required to do more, faster and more efficiently. How fast vendors can upgrade their employee skills and adapt as well as their ability to translate /add to their transcription business into medical coding, billing and other Revenue Cycle Management services will be the key to their survival.

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