Business

Physician paperwork swept offshore

Billing and transcription services are making their way to countries like India and South Africa. Companies save money, but it's unclear whether physicians do.

By Tyler Chin — Posted May 10, 2004

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Family physician John Cerritelli, MD, since 2002 has retained a company based 12 miles north of his Belleville, N.J., office to handle his billing. But his billing paperwork is actually being done thousands of miles away, in India.

Dr. Cerritelli isn't alone. Whether physicians know it or not, services such as billing, transcription, interpretation of radiology images, coding, claims review and adjudication, as well as staffing nurse call centers, are being performed in English-speaking countries overseas -- including India, South Africa, Philippines, Ireland and Australia -- that can offer cheaper labor and, perhaps, a larger pool of qualified workers than America.

No one knows exactly how much of this work is being outsourced -- or, to use another popular term, offshored -- to workers outside the United States, or even how much offshoring is going on in other fields. It's been happening for years, but with the government estimating that the American economy has lost 2.2 million jobs since 2001, outsourcing has emerged as a political issue.

Proponents of offshoring say the jobs created overseas aren't always replacing American jobs, and in fact can create financially healthy companies that would hire more workers at home. But with various reports forecasting that American companies plan to outsource millions of jobs over the next decade, legislators are nervous about the future: More than 20 states are considering legislation that would limit offshoring jobs.

Several states are considering banning medical -- financial and personal -- information from being sent overseas to protect American jobs, patient privacy or both after a transcriptionist in Pakistan last year threatened to post medical records on the Internet if the University of California, San Francisco, Medical Center failed to pay the wages she claimed she was owed by the subcontractor who had hired her.

California state Sen. Joseph Dunn, who introduced one of the bills, argues that the legislation is necessary to protect patient privacy because HIPAA can't be enforced abroad. But opponents counter that, if approved, the legislation will spawn a host of unintended consequences.

Industry groups support outsourcing

In March, four industry groups -- the American Health Information Management Assn., the American Assn. for Medical Transcription, the California Health Information Assn. and the Medical Transcription Industry Alliance -- issued a joint policy statement asserting that banning offshore outsourcing will delay transcription, resulting in higher costs for doctors and hospitals and delays in surgeries for patients and payments for physicians and hospitals, and putting hospitals at risk of losing their accreditation.

As far as Dr. Cerritelli is concerned, there's no debate on offshoring. He's been happy with the work done by Claims Power, whose owner, Rajeev Thadani, employs 30 people in India.

"He's getting the job done," Dr. Cerritelli said. "The issue of [workers being] overseas is more between him and overseas because I never [call] overseas. I just communicate with him [in New Jersey]."

Why jobs are going overseas

Physicians don't yet have to worry that their jobs will be sent offshore. But in other fields, it's a different story. Lower labor costs, a shortage of allied health workers in the United States, the time difference, the quality of service and quality-of-life issues are fueling the move offshore. Some physicians and hospitals contract directly with foreign vendors while others contract with domestic vendors who in turn subcontract with offshore companies or employ workers overseas.

A shortage of workers is key to the outsourcing of transcription services. There simply aren't enough transcriptionists in the United States because Americans don't consider the field an attractive career, said Peter Preziosi, executive director of the American Assn. for Medical Transcription.

Average annual salaries have been flat since 1999, ranging from $27,000 to $32,000, kept low because of speech-recognition technology and cheaper overseas labor, he said

Indian transcriptionists, on average, earn the equivalent of $125 to $150 a month, said David Iwinski Jr., CEO of Acusis Inc., a Pittsburgh-based medical transcription company that employs about 600 people, including 450 transcriptionists, editors and quality control workers in India.

Labor is cheaper in India than here, but the overall cost of providing offshore services to hospitals and physicians "is not as cheap as the pure wage differential would suggest," Iwinski said. A substantial portion of labor savings gets eaten up because offshore operations require heavier investments in technology, management, editing and quality assurance, he said. U.S. transcriptionists also are more productive than their Indian counterparts, with three to four Indian transcriptionists needed to match the productivity of one American worker.

"The transcription industry has only been around for seven years there, and the average U.S. transcriptionist has 14 years to 16 years of experience," Iwinski said. "The biggest advantage of India is not so much labor costs but that there are available people [to do the job]. ... We have doctors, nurses, pharmacists and even surgeons who find that they can make more money typing up American records than practicing medicine in India."

Indian transcriptionists can earn four to eight times the monthly average once they hit certain productivity and quality milestones, he said.

Who sees the savings?

Even when offshore vendors or domestic companies that subcontract with them can save money, that does not necessarily mean that the companies will pass the savings on to physicians, said Robert Burleigh, a medical billing consultant and president of the Healthcare Billing & Management Assn.

"There are billing companies that have elected to do it and others that have not," Burleigh said. Like doctors and businesses in other industries, billing companies have seen their labor and health costs soar, meaning that they have to either raise fees or control costs by, among other things, using offshore labor, he said.

Claim Power passes its savings to clients, charging 4.25% to 6.5% of collections, depending on the physician's specialty, Thadani said. That is at the lower end of the 2.5% to 16% of collections most U.S. companies charge, Burleigh said.

Acusis typically charges doctors and hospitals 11.5 cents to 13 cents per line for transcription, which is 15% to 25% lower than its American competitors charge, Iwinski said.

Send people instead

Rather than outsourcing the work, Sacramento (Calif.) Radiology Medical Group sends its physicians to Spain for three to four weeks at a time to provide after-hours teleradiology coverage to its emergency department clients in the United States.

The intent isn't to save money but to offer group members a better quality of life, said James Moorefield, MD, a radiologist with the 20-physician practice. Rather than staying in the United States and working nights at hospitals in Sacramento, doctors in Barcelona, nine hours ahead of the West Coast, can work days and enjoy the experience of living abroad.

Plus, the quality of care is unaffected. "Teleradiology is the same whether you do it from your home, here or do it in another country," Dr. Moorefield said. "It doesn't make any difference as far as the technology is concerned."

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ADDITIONAL INFORMATION

Outsourcing with privacy

HIPAA privacy protections apply to medical documents, regardless of where office services are performed, according to Margaret J. Davino, a health care attorney with Kaufman, Borgeest & Ryan, New York.

  • The law does not mention outsourcing.
  • It does not require you to ask vendors where they are doing the work.
  • But it does require you to obtain a business associate agreement under which vendors must agree to protect the privacy of the patient information. "Basically the responsibility of the doctor is to get that business associate agreement to make sure that the person they are contracting with is somebody who seems to be OK," Davino said. "HIPAA doesn't say that you have to go and investigate that they are OK, but it does say that if you have any notice that there's a problem, then you have to do something about it."

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Going offshore

Health care services being done abroad include:

  • Transcription
  • Data entry for medical billing
  • Interpretation of radiology images
  • Coding
  • Claims review and adjudication
  • Staffing nurse call centers

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