US Healthcare reforms: Are Indian IT/BPOs listening?

Wednesday, 14 July 2010

The US Government’s Patient Protection and Affordable Care Act in March 2010 is monumental in all respects. The healthcare bill, valued at USD 940 billion, will provide healthcare coverage to 32 million Americans over the course of the coming decade. The US has spent $2.5 trillion on healthcare in 2009, and the bill will increase this expenditure by an additional $261 billion. Healthcare providers offering insurance, medical or any other related services are sure to witness an increase in business. However, it also brings with it additional cost overheads.

Typically these cost overheads include business enabling functions such as finance & accounting, IT, contact centers, enrolling, claims processing, transcribing records, etc. With increased patient coverage a direct result of the healthcare bill, these costs are expected to rise. While outsourcing in the healthcare industry is not uncommon, the healthcare bill will provide a significant opportunity for IT/BPO providers – opportunity that companies like Firstsource, Patni, and Wipro have already started addressing.

However this time around the opportunity goes beyond just back office and support functions. The bill has also made provisions for implementation of electronic health records (EHR) for every American – the US Government has allocated $37 billion for EHR in the healthcare bill. Converting existing records into a unified record system provides opportunities for services that entail IT, conversions of records to suitable formats, developing content management systems, training and support. In addition, once the system has been developed, opportunities will also exist in medical transcription and ongoing support to clinics and hospitals.

Not unexpectedly, there are certain stipulations built into the healthcare bill to check outsourcing/offshoring. Healthcare providers now face limits on how much they can outsource. Offshoring of sensitive data (categorized in the bill) is also prohibited. The outsourced service providers are however gearing up to face this and other challenges.

Service providers - Addressing the opportunity

A presence in the US will help Indian IT/BPO companies offer services that are prohibited from going offshore. It also allows these companies to leverage a hybrid model. Such a model will not only offer better pricing for buyers of services, but also better margins for providers.

Company	What are they doing?
Patni	Acquired CHCS. This acquisition will allow Patni to offer services that cannot be offshored in addition to their offshored services.
Firstsource	Their 2007 acquisition of MedAssist provides a platform to offer a similar range of services.
Wipro	The company is looking to double its workforce in the US by 2013 and also open new delivery centers across the country.

IT/BPO companies like Infosys, WNS, TCS, Genpact and Mahindra Satyam already cater to the global healthcare industry, and will be in contention for contracts. Given the size of the opportunity, there will be significant activity – acquisitions, scaling operations and of course, vying for contracts.

The US healthcare industry has an immense task ahead. In order to comply with all aspects of the bill, the industry will have to develop and establish the necessary infrastructure, capabilities and back end systems/processes – and the inability of the healthcare industry to handle this extra burden is a well known fact.

This is where the Indian service providers can step in and make most of this opportunity. However, tapping into that opportunity presents a set of challenges. Healthcare industry norms are stringent and companies will need to obtain necessary compliances applicable in the US. As providers address these challenges, one thing is for sure – healthcare outsourcing is set for a boom.

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