siliconindia

Healthcare: A Challenging Yet Promising Market For India

Author: Gopi Natarajan
CEO, Omega Healthcare
Healthcare: A Challenging Yet Promising Market For India -By-Gopi Natarajan
The recent healthcare reforms announced in the U.S. have arguably been one of the most opportunistic business areas that Indian services industry can look forward to. While the quality of healthcare in the US is arguably one of the best in the world, the administrative aspects of the industry is by far the most complex and difficult to comprehend systems and processes in the world. The healthcare industry currently represents about 12 percent of the US GDP and is expected to reach close to 15 percent over the next 7-8 years. Traditionally, the administrative side of the healthcare industry has been termed the laggard when it comes to technology adoption, and the IT spend is estimated to be about two percent of revenues compared to the financial or banking industries where it is about 8 to 10 percent.

Trends

There is a major reason why technology adoption is difficult in the administrative side of the healthcare industry; it is the regulatory complexities involved. Most IT companies have found it difficult to build systems that are able to handle the ever changing federal, state, and private insurance regulations. There is a lot of work that has to be done manually in order to keep the monies flowing between the various constituents. While this trend has been changing over the years, it will still take a very long time for systems to catch up and replace the amount of manual work that will always be needed.

It is anticipated that over the next few years the amount of data entry work will probably reduce, as systems get more sophisticated and data transfer between the various systems become more seamless. Regardless of this, the need for value added services like medical coding, insurance follow-up, collection activities, and claims adjudication services will continue to increase. The healthcare reform package recently announced by President Obama, which is considered the most sweeping change in the industry since the Medicare changes in the 1960’s, has some challenges to overcome in terms of financing the various programs and reforms that have been announced.

In any event, some form of the reform is much needed in the industry and will go into effect only over the next 3 to 5 years, and will add more than 40 million Americans (who currently don’t have insurance) to the insurance system. This will increase the magnitude and scope of the administrative complexity, thus leading to more manual work that has to be performed. In addition, the US has mandated that the entire industry move from ICD-9 (International Classification of Diseases) to the usage of ICD-10 codes throughout. This move to the ICD-10 coding system is forecast to be as big as the Y2K opportunity. Thousands of companies in the industry will have to make changes to their systems and processes to accommodate this transition. For example, there is a total of over 16,000 ICD-9 codes while the number of ICD-10 codes are about 64,000 and more.

Challenges

The opportunity for IT and services outsourcing companies in the US healthcare industry is bound to increase over the next few years. As the US economy slowly recovers, companies will look to get more efficient and profitable leading to increased usage of offshore resources. A lot of entrepreneurs and Indian companies understand that the US healthcare industry is stable and fairly recession-proof and the huge opportunity they foresee makes them too eager to get into the industry. Therefore, they tend to get into undesirable business practices like arbitrarily lowering the pricing and paying more for labor in India, in effect squeezing the margins and jeopardizing the long term viability of the services industry from a quality perspective.

Security of information is extremely important when servicing the US healthcare industry and a lot of companies in India do not understand the risks associated with sensitive information leaking outside and the negative effect it will have on the future of the entire industry. Servicing the US healthcare industry properly will require a good amount of capital investment upfront to set up the proper infrastructure. Serious entrepreneurs should be cognizant of this, if they are in it for a long haul. The other challenge will be to find good talent in India to provide the services, especially the voice based ones as this requires not only good English communication skills but also very good analytical skills.

In summary, while the opportunity remains huge for the healthcare outsourcing industry in India and can grow 20-fold from where it is today, it will happen only if we collectivity provide a lot of value added and high quality services.
Previous  article
Next article
 
Write your comment now

Email    Password: 
Don't have SiliconIndia account? Sign up    Forgot your password? Reset
  Cancel
Reader's comments(3)
1: From: Mrs. Mary David

This mail may be a surprise to you because you did not give me the permission to do so and neither do you know me but before I tell you about myself I want you to please forgive me for sending this mail without your permission. I am writing this letter in confidence believing that if it is the will of God for you to help me and my family, God almighty will bless and reward you abundantly. I need an honest and trust worthy person like you to entrust this huge transfer project unto.

My name is Mrs. Mary David, The Branch Manager of a Financial Institution. I am a Ghanaian married with 3 kids. I am writing to solicit your assistance in the transfer of US$7,500,000.00 Dollars. This fund is the excess of what my branch in which I am the manager made as profit last year (i.e. 2010 financial year). I have already submitted an annual report for that year to my head office in Accra-Ghana as I have watched with keen interest as they will never know of this excess. I have since, placed this amount of US$7,500,000.00 Dollars on an Escrow Coded account without a beneficiary (Anonymous) to avoid trace.

As an officer of the bank, I cannot be directly connected to this money thus I am impelled to request for your assistance to receive this money into your bank account on my behalf. I agree that 40% of this money will be for you as a foreign partner, in respect to the provision of a foreign account, and 60% would be for me. I do need to stress that there are practically no risk involved in this. It's going to be a bank-to-bank transfer. All I need from you is to stand as the original depositor of this fund so that the fund can be transferred to your account.

If you accept this offer, I will appreciate your timely response to me. This is why and only reason why I contacted you, I am willing to go into partnership investment with you owing to your wealth of experience, So please if you are interested to assist on this venture kindly contact me back for a brief discussion on how to proceed.

All correspondence must be via my private E-mail (dmary4love1@yahoo.fr) for obvious security reasons.

Best regards,
Mrs. Mary David.
Posted by: mary lovely david - Monday 26th, September 2011
2: Hi my dear,
My name is Mounace, i would like to establish a true relationship with you in one love. please send email to me at (mounace43@yahoo.com) i will reply to you with my picture and tell you more about myself. thanks and remain blessed for me,
Your new friend Mounace
Posted by: mounace love love - Thursday 09th, June 2011
3: Interesting and informative article.
Hope that Indian software companies will be benefited.

http://raamachandran.com
Posted by: Ramachandran Vayamkara - Saturday 22nd, January 2011
More articles
The retail industry is witnessing an increased migration of customers ... -By-Kaushal Mehta
by Kaushal Mehta - Founder & CEO, Motif Inc..
The retail industry is witnessing an increased migration of customers from traditional brick and mortar retail to E-commerce (online retail)...more>>
Its 1 AM. Do You Know What Your Offshore Team Is Doing? -By-Samir Shah
by Samir Shah - CEO, Zephyr .
You probably do because you are on the phone with them! For all of you working in some technical management capacity here in Silicon Valley,...more>>
Disconnect: The Root Of All Execution Evils -By-Raj Karamchedu
by Raj Karamchedu - Chief Operating Officer, Legend Silicon .
These days are a mixed bag for me. Of late I have been considering "doing something bigger and better," in my life, perhaps seriously though...more>>
IT Services Rise Of Tier II Companies -By-Madhavi Vuppalapati
by Madhavi Vuppalapati - CEO of Prithvi Information Solutions .
IT Services Rise of Tier II companies The Indian IT outsourcing industry is going through very exciting phase in its business life...more>>
DLP, Prevention Is Better Than A Cure -By-Bhaskar Bakthavatsalu
by Bhaskar Bakthavatsalu- Country Manager, India and SAARC of Check Point Software Technologies.
Data loss occurs every day through corporate email. In fact, given the sheer number of emails an organization sends every day, data loss inc...more>>