Globalization is dramatically impacting the United States economy and our domestic technology market is an active player. Historically, companies in developed countries have led globalization by pushing products and services into developing countries and emerging economies. Now, emerging countries are pushing their services into developed countries with quality labor and services at low cost.
In short, globalization has become a two-way street as both sides exploit each other's markets and economies, creating a virtual world labor and market force.
The healthcare industry has been considered resistant to outsourcing and offshore services as compared to other industries. This is due to many factors including environment, culture, regulatory/compliance requirements and other risk related issues. Healthcare's payer and supplier sectors appear more aggressive with these services than the provider sector. The provider sector appears to use most offshore services, especially technology services, through American-based companies or subsidiaries. However, there are those few who directly contract for these services. We see offshore services in a variety of healthcare areas including medical transcription, physician credentialing, teleradiology, claims processing, programming, report writing, interface development, and call center and help desk support services.
Information technology is a significant area for healthcare offshore services. Many of our leading healthcare technology vendors have significant or growing overseas operations, while others are contracting for these services. If you are a customer of healthcare technology, then you most likely are a consumer of overseas services in some fashion.outsourcing and offshore
What is the future of healthcare outsourcing and offshore services? This will vary across the provider, payer, and supplier sectors. Some anticipate conservative growth rates with organizations using these services only in areas not critical to their success and competitive position. Others anticipate more aggressive growth across healthcare.
Healthcare has proven to be one of the most challenging industries for offshore services due in part to the highly regulatory environment and compliance requirements. Cost reduction and savings alone is not a solid business case for using offshore services in healthcare. Organizations must also consider ways offshore services can be used as a strategic tool integrated with their business model. For example, providers should evaluate if offshore services would support and improve the organization's overall ability to deliver quality services. Would these services contribute to increased patient safety or to improved care delivery efficiencies and service levels? Regardless of trends, outsourcing and offshore services will remain part of the healthcare industry.
In fact, Americans may have to deal more with overseas companies as foreign companies elect to delist from the U.S. stock exchange in the future, due in part to the burdens of Sarbanes-Oxley compliance. So far, about 70 countries are currently working for compliance to the International Finance Reporting Standards (IFRS) required by European Union public companies as of January 2005. Since the IFRS accounting framework is in place and used by many Third World countries, foreign companies may find it difficult to justify SOX compliance for only the United States and opt to delist here.
What it means to you
Globalization will continue to change America's economic and business landscape. How healthcare engages and manages outsourcing and offshore services will also change. We can be an active player in setting this future course.
- Research outsourcing and offshore services in other industries as well as healthcare. There is a wealth of information about risks, vendor selection, contracting, regulatory compliance and business case development.
- Determine if your organization is using offshore services even if contracted through an American-based entity. While you may not change existing relationships or contracts, you will be in a better position to accommodate change and facilitate planning.
- Stay informed about healthcare legislative, compliance and regulatory activities related to outsourcing and offshore services. This area separates healthcare from other industries with outsourcing and offshore services. Be active with your local and national level elected officials. The HIMSS Advocacy Center is an excellent resource to support efforts for both a beginner and seasoned person in the advocacy arena.
HIMSS is hosting a Leadership Summit "Business Expansion in the Global Healthcare Information Technology Market," Dec. 5 - 6, 2005, in Washington, D.C.
Pam Matthews, FHIMSS, CIO of American Healthcare Services, has more than 25 years experience in healthcare with the last 15 in information systems. She is a member of CHIME and HIMSS, and is a member of the HIMSS Globalization HIT Task Force.