Whoever said Obama was going to be bad news for the outsourcing business? The outsourcing market has rebounded heavily with the economic recovery and the successful passage of the new Heathcare Reform Bill has both the IT outsourcers and BPOs on red-alert for a barrage of new business opportunities. For example, the need for payors to manage their administrative costs has never been as intense as it is now, with the fixed medical loss ratios.
We’ve sent our analysts Mindy Blodgett and Anthony Calabrese on the trail to find out exactly what this bill means to both healthcare provision and how it will impact the outsourcing industry. Our research starts now and we’d like both healthcare providers and outsourcers to get involved:
Healthcare Reform: The Scramble for Outsourcing Business Begins
The successful passage of the historic Healthcare Reform bill has sent eager BPO and IT services providers scrambling to be first in line to take on new business.
With 32 million Americans slated to join the ranks of the newly-insured, that’s going to create a major administrative headache for healthcare payors and providers. Increased business process requirements, in the form of new customer enrollment; customer service; claims processing, revenue cycle management etc. will soon be cropping up as the existing systems strain to cope with the major influx of new users. Moreover, the additional demand for IT services to support the increased data requirements is already pushing service providers to position their strategies for incremental business.
Healthcare insurance providers, leery of outsourcing processes, will have little choice but to seriously examine BPO as a way to quickly scale up to handle the new administrative requirements. When facing the new demand for services and the unpredictability that will ensue, the flexibility of a BPO partnership to support rapid expansion, while keeping costs down, becomes much more attractive than hiring new staff for an uncertain volume of new business. In addition, new regulations and requirements, still being understood and analyzed, will put increased pressure on healthcare and insurance providers, which are part of an industry that is already strictly monitored and tracked. Smart providers that can stay ahead of the new regulatory environment and to stand ready with relatively low-cost, quick-fixes to these issues, will be in a prime position to develop or grow their healthcare delivery footprints.
In terms of IT services, it has been estimated that the U.S. will need to spend some $2.5 trillion just to develop a new healthcare system. The bill allocates about $37 billion for electronic healthcare records (EHR), forcing healthcare providers to look at such activities as data conversion and the beta testing; installation and change management needed for a new system. Creating a standard for EHR and implementing it will be a huge challenge for payors and providers, and they will look to outside help to ease the cost and the headaches. Healthcare providers, like never before, will be interested in resource optimization; access to accurate data 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 to the negotiation-table starts now
While BPO providers scrutinize this looming opportunity, they are also assessing the pitfalls. Some BPO insiders worry that many of the providers are not prepared with the technology and services required to meet the growing needs. As providers ramp up their functional delivery capabilities in areas such as revenue cycle management; clinical supply chain management for clinical and affiliated businesses; there will likely be a time-lag while insurance providers consider their options. However, those which are engaging in the right conversations with the insurance providers today, will likely be at the negotiation-table when it’s time to select service partners for the additional work-requirements.
The offshore service providers, in particular, are salivating at the potential of this new market. But they face some challenges, including the fact that some of the work will be prohibited from being offshored. Such providers as Cognizant, Genpact, Infosys, and TCS and Wipro, just to name a few, are considering ways, therefore, to expand their onshore and nearshore delivery center presence or to broaden their partnerships. BPO providers are working on expanding, revamping and launching services to meet the need. Also well positioned to take advantage of the new market are incumbent BPO giants such as Xerox (ACS), Accenture and IBM. Moreover, Dell, with its recent acquisition of healthcare IT-BPO specialist Perot Systems, is on red altert to expand its footprint in the sector.
At HfS, we are committed to tracking, researching, analyzing and reporting on this developing healthcare challenge. The Healthcare Reform bill is not just a game-changer politically and socially – it has the potential to alter significantly the outsourcing landscape.
We’d love you to participate in our research, and want to talk with you:
- As a supplier of healthcare-specific BPO services (or a potential supplier) – how are you gearing up to respond to the new needs, requirements and regulations?
- As a practitioner working in the healthcare payer or provider industry, how is the bill impacting you, and how will it influence your outsourcing decisions?
Contact us and we’ll send along some specific questions we are seeking to answer as we put together a report on the changes in healthcare BPO.
Whether you’re a healthcare payor or provider or outsourcing service provicer in the healthcare sector, please email Research Director Mindy Blodgett if you wish to be a part of this pivotal research project.