Back from the depth!!
Once considered a booming sector, medical transcription went bust much sooner than expected, for various reasons. However, things are shaping up now to put the industry back on track. Two key factors are fuelling the recovery - a spurt in healthcare spending in the US and a simultaneous shrinking of MT skill sets in that country. Estimates indicate that the US healthcare market is growing at between 10-15 per cent annually as a result of increase in its ageing populace. At the same time, medical transcription skill sets are shrinking in the US at around five per cent. Cash-strapped US hospitals are looking to offshore medical transcription services so they can cut costs, thus throwing up a big growth opportunity for vendors from countries such as India, the Philippines and Pakistan.
MT service providers in the domestic market are bullish on the near-term prospects. The exports of medical transcription services are estimated to be between $50-100 million annually, and are poised to grow at around 50 per cent. And considering that Indian vendors cater to a fraction of the $6-billion industry, the market potential is immense.
Before looking at other issues, for those wondering what medical transcription is all about, it is simply this: A doctor in the US dictates his findings regarding a patient, including the medical procedure he recommends. His voice is captured, digitised, encrypted, and sent for transcription to countries such as India. The transcriptionist at our end listens, types, and then sends the transcript to editors meant for this. These are medical experts who check the accuracy of the report, paying attention, in particular, to the transcriptionist's work, and they also check the doctor's dictation. Accuracy in this business is considered important and even a small mistake could be fatal. The turn-around time varies between two and 24 hours.
A second chance to play
Players in the highly fragmented Indian MT industry are busy trying to get their act together to make the best use of the re-emerging opportunity. Recently, several MT firms in Bangalore came together to form a self-regulatory body - the Indian Medical Transcription Industry Association (IMTIA). This aims at helping the sector tackle industry-related issues and create awareness about best practices. The IMTIA has started off with 20 members in Bangalore and has evoked interest from MT firms in other cities, says Suresh Nair, CEO, HealthScribe India, and President of the association.
The objective is to formalise and regulate a sector that, to date, has remained largely unorganised and unprotected by data protection laws, says George Ollapally, Country Director, DTS Information Systems Private Ltd, and Secretary of IMTIA. The forming of such an industry body is considered vital in the Indian context as a majority of the 300-odd companies that operate in this space are run by small-time entrepreneurs. Most of these vendors sub-contract for the bigger firms, especially the Indian subsidiaries of major US firms, such as HealthScribe Inc, C-Bay Systems, Heartland and Spryance. Most of the US firms have also set up their operations in India so as to tap the `low cost' advantage.
The industry employs close to 10,000 people and has the potential to add around 2,000 more every month, says Nair.
Lessons from the past
As the Indian medical transcription industry comes out of the dumps and looks to latch on to the next phase of growth, it is important to analyse what caused the downturn in the first place. Industry observers cite several reasons, the key ones include the lack of entrepreneurial experience, and the entry of some fly-by-night operators that caused the downfall of the industry. Considered a sunrise industry, medical transcription caught the fancy of Indian entrepreneurs in the second half of the last decade. As the Indian IT sector started inching towards the boom period in the late 1990s, entrepreneurs who were not part of the IT boom jumped onto the MT bandwagon, taking it for an easy route to a fast buck. As a result, many small MT centres sprang up in pockets such as Bangalore, Hyderabad, Ahmedabad, Pune, Mumbai and Coimbatore. So also training centres mushroomed to feed the manpower needs of these centres. However, most of these entrepreneurs did not have an in-depth understanding of the sector, and also no clue as to how they could tap the US healthcare market. To add to the problem, some of these players also initiated a price war by undercutting each other and started offering services at unrealistically low prices. While the deals were won, many of the vendors couldn't keep up the delivery schedules, resulting in erosion of credibility. Many of the smaller units were forced to shut shop and MT in India fizzled out.
Another key factor that contributed to the early downfall was the obvious difference in the way in which the US industry and the Indian industry operated, says Nair. Transcriptionists in the US operate from their homes while in India they are employed by a firm and operate from the office. In India, MT firms need to invest in setting up the infrastructure, which needs upfront investments. Also, the firms need to invest in and bear the huge training costs. It is estimated that bigger firms invest anywhere between Rs 60,000 and Rs 1 lakh on training each transcriptionist, while smaller firms invest slightly less than that. The gestation period in this sector is very high, say between nine months and a year, and companies need to have solid financial backing before they can start earning revenues, Nair says. The small players, for most part, did not have adequate financial backing, precipitating the slump.
The MT pie and BPOs
While India has all along been an attractive MT destination, because of the cost advantage, the availability of people with sufficient expertise in the English language, the infrastructure and bandwidth, there are challenges ahead for the resurgent sector. A recent trend is that hospitals belonging to a particular group or chain are aggregating their transcription work and offloading it to offshore vendors as a single deal. "The consolidation of suppliers in a bid to get a better price from vendors has began to happen," says Nair, adding that this could squeeze the margins of major vendors. Many of the medium and small Indian vendors are currently servicing the clinic segment in the US and the large hospitals remain untapped. The clinics account for between 30-40 per cent of the overall market.
Other issues to be taken care of include: compliance with standards such as HIPAA (the Health Insurance Portability and Accountability Act); the absence of adequate data privacy laws, and capacity constraint. Nair feels the biggest challenge will be to maintain and comply with the security standards mandated under HIPAA, which mandates secrecy for patient information. The privacy aspect under HIPAA was made mandatory last year and the security part of it will be made mandatory next year, says Nair. For companies that deal with the electronic management of healthcare information, it is not only vital to protect the electronic maintenance and transmission of patient data, but also protect any paper versions or oral discussions pertaining to patient information. It is an obvious concern for companies outsourcing healthcare work to ensure that vendors comply with international standards, says Ollapally.
Despite the fact that data privacy laws in the country are inadequate, several players have turned HIPAA-compliant by implementing some measures proactively. This pro-activeness conveys positive signals to customers, says Nair.
A major objective of the IMTIA is to ensure that there is information flow between the industry players. Capacity constraint is another hurdle faced by the Indian MT industry as it vies for the same skill sets that the booming business process outsourcing (BPO) sector is gunning for. The association aims to create awareness about MT as a viable long-term career option, says Nair.
Unlike in BPO, a transcriptionist does not have to necessarily work in nightshifts. Morever, one can earn depending on his productivity. Experienced MTs earn anywhere between Rs 10,000 and Rs 50,000 a month, whereas freshers start with a salary of around Rs 6,000. Moreover, age is not an issue in this industry as long as a person has the requisite skills, says Ollapally.
The MT industry could face competition from speech recognition software, several versions of which are already available in the market. "We are not unduly worried about speech recognition software as human intervention is still required," says Ollapally, adding that unlike in BPO, MT also provides an opportunity to work from home. Home-based transcription (HBT), as it is popularly known, is catching up fast in the Indian context. It is estimated that the tribe of HBTs execute between 10-20 per cent of the MT work offshored to India. As for revenues, deals are quantified in terms of lines per month. Currently, the offshore rates are between 8-9 cents per line while the onsite rates are around 12 cents a line. The deals range from as low as 50,000 lines a month to several million lines a month. "It basically depends on the size of the hospitals and the clinics in the US," Nair says.
The industry has already made a mark and it is only a matter of time before it moves up the value chain to render services such as medical coding and billing services, document imaging, data warehousing and high end services.
Courtesy: The Hindu Business Line
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