Global Healthcare IT Outsourcing Market growth fuelled by Cloud Computing till 2018

Global Healthcare IT Outsourcing market is expected to grow at a CAGR of 7.6%, to reach $50.4 billion by 2018 from $35 billion in 2013 according to a report provided by MarketsandMarkets, a global market research and consulting company. US Healthcare companies accounts for the largest share - 72% - of this market and is expected to reach $36 billion by 2018 from $25 billion in 2013. Asia-Pacific and Rest of the World are expected to register CAGRs of 8.1% and 7.8% (2013 to 2018) respectively, followed by North America (7.6%), and Europe (7.2%). Health insurance companies, healthcare services providing companies, healthcare systems and equipment companies are part of this market segment that have to reduce their operational costs, administrative costs, focus on core processes, implement information technology to run processes and also manage risks and develop new product offerings. Particularly information technology has become a core component for running the companies and offer product and services to customers and in some instances IT has become the competitive advantage. There is a huge demand for Healthcare IT professionals both on the medical and the process front and highly skilled professionals like actuaries, medical coders, medical writers, biostatisticians, physiotherapists, nurses, general physicians, ayurvedic and homeopathic practitioners are needed for healthcare IT industry to offer services like medical coding, medical writing, bio-statics, healthcare and data analytics. Some of the healthcare companies have completely outsourced their IT systems and some have outsourced only key applications like electronic medical records, medical transcription, billing services, claims processing, data analytics.

Availability of low cost highly skilled IT professionals, implementation of new technologies, government regulations like Obama Care, ICD 10 coding and integration of different technologies already being used with the new technologies like cloud computing, mobility and analytics have presented a big opportunity for the Indian IT service vendors like TCS, Infosys, Cognizant, Wipro, HCL Tech, etc. Cloud Computing is being widely adopted by healthcare companies across the globe as there are significant cost benefits associated with this technology as the companies need not invest heavily on hardware like servers, datacenters, etc. Cloud computing is highly flexible, can be accessed from everywhere, uninterrupted service and also helps to scale up the operations at a faster pace but there are certain disadvantages like data security and reliability issues like downtime. Despite these disadvantages the need for reduction in costs, operation times and efficient back office management is must for the success of healthcare companies. Healthcare IT outsourcing vertical has been dominated by Cognizant Technology Solutions, but other players in the Indian IT Services industry like TCS, Infosys, Wipro, HCL Tech have built up significant capabilities and acquired the much needed technical expertise and skills through mergers and acquisitions and also captured some big deals in this segment. All the Indian vendors both the ITO and BPO vendors have exclusive focus on the healthcare IT outsourcing segment and have even referred to this segment as a key growth driver for the industry in terms of both revenues and profits.  

Healthcare BPO – Medical Coding, Billing and Transcription India 2012

The total value of the U.S. healthcare business process outsourcing market is about $38 billion, according to Sutherland. According to industry data, demand for healthcare outsourcing services has been growing at a pace of about 25-35 per cent every year over the last few years. Healthcare provider outsourcing has the highest growth rate of 31.9% from 2013 to 2018 because of the conversion from ICD-9 coding system to ICD-10 coding system to be implemented by October 2014 in the US. Provider outsourcing capabilities are Medical billing, Medical coding and Medical transcription. Medical Billing is the major process outsourced by the providers from the US market and Claims processing is the dominating outsourcing process for the Payor market. U.S. is the largest source of outsourcing, followed by Europe. The most preferred destination is India in payer and provider outsourcing. Philippines is an upcoming destination making its mark in payer and provider outsourcing. Medical Transcription is a US$ 18 billion industry growing at 15% every year and is expected to reach US$ 20-25 billion in next five years.

India has advantages when compared to the other outsourcing destinations such as has availability of high number of healthcare professionals, affordable cost of living, large patient pool, and decreased time and cost of recruitment. The skill sets for this sector demands graduates in Life Sciences with a specialization in biology, microbiology, physical therapy, biochemistry and nursing for the medical coding space. The data entry segment looks for not just typing skills but candidates with analytical abilities. The voice based assignments call for graduates with excellent communication skills.  India has now established itself as an outsourcing destination of choice for the medical coding work, which is a complicated process. Over the last two years, more and more of the in-patient coding work is being outsourced to India and is by far the most complex coding work. Medical Billing & Coding is the process of submitting and following up on claims to insurance companies in order to receive payment for services rendered by a healthcare provider. Medical transcription, also known as MT, is an allied health profession, which deals in the process of transcription, or converting voice-recorded reports as dictated by physicians or other healthcare professionals, into text format. (Source: Wikipedia)

Medical Coding and Billing have evolved into complex process due to the change from ICD-9 coding to ICD-10 coding mechanism which is much more detailed in its Code-sets, stresses the need for clinical documentation to be precise in order to get accurate payments. Many Providers also recognized the extent of revenue loss incurred due to poor documentation based on the past claims data and poor documentation also created problems during audits which led to revenue losses too. The next few years there is good opportunity for growth in this segment and large Indian players too are looking at this segment but this segment is predominantly dominated by small specialist players only. Medical Transcription outsourcing projects to India started nearly 15 years ago and many companies have been successful in servicing the US clients with the availability of the skilled talent pool and labor arbitrage as the cost is very less in India. Most of the Indian BPO vendors offer the medical coding and transcription services and are also looking to acquire companies in this segment as evident with M&A activity in Healthcare BPO segment.