Outsourcing/ Offshoring in Healthcare

1. Outsourcing/ Offshoring in Healthcare Presented by Suniti Ponkshe April 2004

2. Today’s Focus • Outsourcing • Off-shoring • Offshore Transcription Services • Other Outsourcing in healthcare • Issues to remember

3. Outsourcing --- is the transfer of ownership of a process to a supplier. Essence of Outsourcing --- taking important business functions that don’t differentiate your business and extracting value while minimizing your investment of time, money and talent. Offshoring --- is transfer of internal business process or technology processing to an external provider outside U S A Essence of Offshoring --- migrating business processes or technology processes overseas to lower costs without significantly sacrificing quality; countries such as India, the Philippines, Ireland, China and emerging in Russia What is outsourcing & offshoring?

4. State of the Outsourcing Industry • “By 2005 outsourcing will represent 59% of IT services” – Gartner • “US technology and business process outsourcing revenues will reach $226 billion by 2006 -- up from $103 billion in 2002” - Forrester Research • “By 2007 offshore business process outsourcing services will represent 14% of total BPO market and India’s share will be 57%” – Gartner • “As many as 588,000 U.S. white-collar jobs will be offshored – and a total of 1.6 million by 2010. The U.S. had a total of 138.3 million employed workers at the end of February” --- Forrester Research • “Behind outsourcing debate: surprisingly few hard numbers” –The Wall Street Journal • “The debate about the ethics of offshoring misses the point that it represents the inevitable next generation of business practice” – MIT Sloan Management Review Spring 2004

5. Outsourcing Trends in Health Care • Most of the outsourcing deals have been …….. • Selective Outsourcing for application support • Many of the Total Outsourcing deals have been ….. • Completed in the past 5 years • Many have been traditional facilities management models but Few have beenother models ……… • such asEquity Holdings • Typically, outsourcing models have been conservative …. • They have been designed to address fear of loosing control

6. Offshoring Trends in Health Care and non-Health Care markets • Healthcare has been leveraging offshore market for transcription services for almost 10 years ….. • Address staffing shortages and extend the working day • Total market is $20 Billion and $40 million is in India • Other healthcare areas are starting to use offshore market • Radiology readings • Other industries have been leveraging offshore market for many years • Full IT services • Business Processes • Emerging areas: legal research, tax professionals, technical writers

7. Offshoring Trends in Health Care and non-Health Care markets • Other industries have been leveraging offshore market for many years • Full IT services • Business Processes • Emerging areas: legal research, tax professionals, technical writers • Offshore market has come under scrutiny • State of economy --- Jobless recovery • One incidence where patient records privacy was endangered • Fear of offshore market becoming stronger than U S market • According to U.S. Chamber of Commerce “insourcing beats outsourcing by nearly $60 billion annually; by the year 2010 we will not have a shortage of jobs, but rather a shortage of workers ” report released in April 2004

8. Why Outsource or Offshore? • According to the Outsourcing Institute, top three reasons for outsourcing are • Costs • Focus • Resources • Key reasons for offshoring are • Lower costs • Deliver maximum value to customers • Deliver maximum value to shareholders • Today’s Speakers • Outsourcing – how it is working for Adventist • Offshoring – how it did not work for Tumbleweed Corporation • Offshore Transcription – issues related to Medical Records profession