US Healthcare market is estimated
to reach US$ 4.6 trillion by 2020 from 2011 spend of US$ 2.5 trillion and this
provides an outsourcing opportunity of close to US$ 22.5 billion by 2015 from
the 2011 level of US$ 14.5 billion according to research firm Nelson Hall/Technology
Holdings. US Healthcare BPO market consists of Payer segment (healthcare
insurance companies) and provider segment (hospitals) and the global healthcare
industry particularly US Healthcare Industry is undergoing major changes in the
past two years due to regulatory reforms, government policies and technology
developments. Obama Care which is The Patient Protection and Affordable Care
Act that was signed into a Law in March 2010 is expected to expand insurance
access further to more than 30 million US citizens. But the short term
opportunity that beckons Indian IT Vendors is the ICD- 10 (International Classification of Diseases, 10th
edition) transition from the existing ICD-9 system of disease classification and transition has to be
completed by October 2013. US
Healthcare companies are already late for this transition as this
classification was framed in 1993 and countries like Australia,
UK, Germany, etc
have adopted earlier. Also the new regulations forces the players in the industry
to comply with rigorous, expensive auditing and reporting requirements, HIPAA
standards, complex rules for Medicare and Medicaid, and IT standards but the
most important priority right now is the ICD-10 transition.
Claims processing,
which constitutes significant cost (60% of total cost) and is the most
outsources function in the Payer BPO industry, followed by member and provider
management and Wellness. But growth lies in the Payment integrity segment (CAGR
21%) as companies are focused on reducing Frauds, Waste and Abuses as costs
need to be contained for surviving in the industry. Health Information Exchange
(CAGR 19%) and clinical decision support services (CAGR 21%) will also see
significant growth in near future. Provider segment is dominated by post
intervention services but the there is significant growth opportunity in
Medical Coding (CAGR 17%) as transition to ICD-10 is must by October 2013. Pre
intervention services that include insurance verification, patient scheduling,
etc and support services like revenue collection and cycle management also have
significant growth potential in near future. There lies one billion dollar
opportunity for the Indian IT & BPO vendors in US healthcare segment in near
future. US Healthcare companies have traditionally been slow in adopting outsourcing
and with ICD-10 transition and other regulatory and policy changes, raising
costs, margin pressures, higher claims disbursement costs have forced them to consider outsourcing a
priority as Vendors will help them in
containing costs.
Traditionally US have been the
largest market and most of Indian IT Vendors get more than 50% of the revenues
from this region. Until recently BFSI is the dominant revenue generating
vertical for top Indian IT Vendors and with US economic slowdown and European
Debt crisis having significant affect on Banks and Financial Institutions
globally, Indian IT Vendors have seen fall in growth. US Healthcare provides a
significant opportunity for Indian IT Vendors as the Global Software and
Outsourcing firms are expecting deals worth US$ 10-16 billion in this space due
to various regulatory policies and healthcare reforms by the US government and
Indian IT vendors are expected to bag half of these opportunities by 2015
particularly in care management, ICD-10 transition, electronic healthcare
records, etc for healthcare and insurance companies. Indian IT vendors can help
US Healthcare companies in terms of implementing technology, upgrade systems
and software, lower administrative costs as such work can be outsourced to low
cost destinations like India,
and Indian Vendors have undertaken outsourced work in areas of claims, billing
and other service areas. Multi-shore delivery model is necessary, onshore presence
is a must due to the regulatory requirements for sensitive patient data and to
further strengthen their offerings in the Healthcare segment, Indian IT vendors
are further strengthening their onshore presence, recruiting local resources in
US and also looking to acquire small and niche players in the healthcare
segment so that they can acquire technologies, skilled professionals and
clients.
The ICD-10 transition is a
complex process as transition from ICD-9 will increase the coding volume
significantly from 24,000 codes to more than 1, 55,000 codes and there is a
shortage of medical coders in US by more than 30% and there is not much time
for training and developing medical coders as the deadline of October 2013 is
closing in. Indian IT and BPO vendors can grab this opportunity and can easily
recruit young, talented life sciences and healthcare graduates, doctors,
nursing staff and train them in medical terminology and knowledge who can then
service the healthcare clients in the ICD-10 transition and other healthcare
BPO functions. India
has the scale in terms of large pool of healthcare and life sciences
professionals who can be recruited easily at a comparatively lower cost and
easy to train and US healthcare companies can definitely rely on Indian IT
& BPO vendors to achieve the 2013 target for ICD-10 transition. Cognizant
Technology Solutions is the largest player and it got 27% of total revenues
from healthcare vertical and is rated in Top 10 Healthcare service providers
globally and it has invested in this vertical significantly for years. TCS
(5.3%) and Infosys (5.5%) has a very small presence in Life science and
healthcare verticals get around 5% of total revenues and are focusing on
increasing revenues from this vertical by way of acquisitions of small and
niche players in healthcare segment.
Wipro gets 10% and HCL Technologies gets 9% of total revenues from Healthcare
and they are also focusing on significantly improving revenues from Healthcare
vertical. Overall there is a significant growth opportunity for the Indian
Vendors in Healthcare vertical and they too are aggressively looking to capture
the opportunity.
