Outsourcing healthcare--are we ready?

During my Digital Marketplace MBA course this week, we had a rich discussion of emerging outsourcing market, its forms, its impact on global service market and how organization behaviors and norms has been changed by this new arrangement of business model. More and more multinational companies are getting their back-office business processes outsourced overseas, mainly for the purpose of leveraging the wage differential in developing countries. As we can see from the practical experience, informational data mining is one of the most suitable business processes for companies to outsource to third party, since it is relatively easy to form standards around it and to be cost-effective when achieving economic of scale. With huge government initiated expense in healthcare reform, U.S. health care industry has great potential to become next target for outsourcing companies.

By nature, many processes in healthcare practices are informational intensive and therefore are feasible for outsourcing. Among some new healthcare business for outsourcing companies will be likely to come from customer enrollment and customer service. Claims processing will certainly be the next big thing for outsourcing companies, as insurance becomes universally available to US citizens. It is estimated that that about 32 million people who were previously not eligible for insurance can now apply for their insurance plan enabled by Obama healthcare reform bill, and subsequently avail of healthcare services through insurance providers. This means that many insurers will soon be seeking help in the processing of new enrollees as well as existing clients. Healthcare IT service will also generate huge demand for outsourcing efforts, the Electronic Medical Record for instance being one of the main sources where business is foreseeable. Healthcare providers will becoming more and more interested in resource optimization, and will look to the third-party providers for low-cost effective solutions to help them quickly react to the larger, and more complex, healthcare provision needs. There will also be a need for analytics solutions to assess the needs and effectiveness of the systems.

The race in the outsourcing battleground is starting for capturing this emerging big pie. On country level, Indian as the world most mature outsourcing country will certainly take advantages of this historical opportunity; many other outsourcing destinations such as Philippines, Mexico, and China will also be attractive outsourcing alternatives. On company level, major players such as Tata and Infosys are actively forming their efforts team to respond to this opportunity, and are establishing U.S. onshore centers hoping to mitigate regulation risk and getting more contracts from U.S. medical institutions.

Just as every penny has two sides, healthcare outsourcing also has its own risks and uncertainty. Traditionally, healthcare industry are very conservative towards outsourcing due to the  huge potential liability if mistakes were made or information flow didn't happen on time, which poses legislative risks both towards outsource providers and healthcare provider. Privacy protection is also a major concern; after all, this is one’s health confidential information at sake, which would lead to severe illegal usage if manipulated wrongly. For healthcare outsoucers, there are certain standards they need to meet in order to be qualified participants. For instance, the privacy, security, coding and data transmission standards of the Health Insurance Portability and Accountability Act (HIPAA) is among one set of the regulatory issues that control the way providers and payers do business. Although it’s a big driver for outsourcing, only those outsourcers that become HIPAA compliant will reap the benefit of new business. So, for each stakeholder in healthcare outsourcing ecosystem, certain investigation and preparation should made before taking actions to step into this arena.

P.S. To get  better idea of healthcare billing is being outsourced, I hope this video could help:

The Changing Landscape of patient-doctor relationships

We’ve been discussing about personalized medicine and electronic medical record as the supporting backbone of healthcare informational transformation.  Technologies, whether are in form of powerful genomic sequencing methodology or medical record synergizing pipeline, has changed the macro medical delivery system, and as a result poses more and more actual influence on our daily practices and mindset of health care. The patient-doctor relationships, for instance, is among one of the major changes ongoing.

For much of the twentieth century, medicine and healthcare was primarily an information- asymmetric market where physicians, hospitals, pharmaceutical industry, insurance companies and government agencies dominated and enjoyed the information advantage. Now, empowering by internet and social networks, we are seeing a shift of health care from a hierarchical delivery system to one that features more transparency, collaboration, patient involvement and proactivity. A customer driven medicine involving non-traditional healthcare provider has come into being.  For instance, drugstores franchise such as CVS and Walgreen, and Wal-Mart have respectively developed their in-store treatment center. Many out-patient facilities and mobile clinics are expanding pretty fast. More and more consumers get health information through online websites; many patients buy drugs online as well (I’m buying my Vitamins regularly online since I moved here in U.S.) Remote monitoring devices and mobile health application allow people to monitor their own basic bio markers such as weight, blood pressure, pulse, and sugar level etc., and send the results back to patients and health care providers. Patients can store their medical records online and access to them wherever they go. Some get personalized feedback via email and reminders when they gain weight, don’t comply with their regime or have high blood pressure.

Social networking sites represent another powerful way that consumers and patients are enabling to be more informed and self-helped. PatientLikeMe.com, an innovative health-information website encourages members not only share their personal disease fighting experience, but also go further to provide their symptoms and treatment data, the aggregation of which will creating a rich database of disease treatment and patient preliminary self-diagnosis. Nowwaht.org.au, an Australia based website, provide a supportive, informative and inclusive online community for young people living with cancer.

What’s the impact of the above phenomenon? Technologies enabled patients shift from the passive reactor to health care information to a proactive explorer. Instead of simply relying on doctors’ diagnosis and isolated with each other, consumers are now virtually connected and empowered by information shared with each other. They not solely rely on someone else’s decision of their healthcare, but gain a bigger say in their own medical and lifestyle choice. This represents one of the major change technologies, especially internet; bring to the practical relationship changes among key stakeholders within healthcare system.

Here's a short video profiling the idea of PatientsLikeMe. Check it out:)