Medical transcription; a big players' game?

Sabil Francis

agencyfaqs!

NEW DELHI, Sep 19

The baby-boomers are a greying lot. And as the generation of Bill Gates and Bill Clinton gets older, medical care in the US is booming business. At the same time, hospitals in America are getting less and less time to deal with mundane matters such as medical transcription, on which hospitals are currently spending millions of dollars. They would much rather outsource this job from countries with cheap, IT-savvy human resources, such as India.

It is this opportunity that HealthScribe India Pvt Ltd - the 100-per cent Indian subsidiary of HealthScribe Inc of the US, one of the world's leading medical transcription companies - is looking at, as it plans to expand existing training and infrastructure in a big way. "We plan to put in millions in the next couple of years," says Tony Hales, CEO, HealthScribe India Ltd.

What is going for the company is the vast pool of top-notch English speakers that India has. People prepared to spend long, dull hours hunched at computer terminals, transcribing the conversation between a doctor and his patient, with 100 per cent accuracy. It is an area that, if exploited well, could result in thousands of jobs in the next few years, and millions of dollars in profit for HealthScribe India.

HealthScribe came to India in 1993, and in the first five years of its operation, invested US $800,000 here. It is now planning to invest "millions more", though company officials declined to give precise figures. They did, however, reveal that HealthScribe India plans to set up its second training centre in India soon. The first training centre is located in Bangalore.

The US market for medical transcription is estimated to be worth $6 billion, and is currently served by mom-and-dad shops, with over 1,000 companies in a highly fragmented market. Of these, only four companies have revenue of over $20 million, and the largest player has less than five per cent market share.

Mirroring the scenario in the US, small medical transcription shops are mushrooming all over India. The promoters, most of who have invested their own money, hope to cash in on an industry that is growing at a rate of 30-40 per cent.

These hopes could go up in smoke. For one, India will not go the US way, insist industry analysts. Then the pressing need for front-end marketing with adequate representation in the US, so that the American consumer is assured that "he can sue you if he wants", as Veer Sagar, CEO, TCG Software Services Pvt Ltd, puts it. And, of course, size does matter. "The money is with the big hospitals, and they would not consider medical transcription centres that employ less than 500 people," says Hales, brushing aside the competition.

The industry is also extremely quality intensive and it takes two to three years to break even. It could be five years before profits start coming in. And the investments are huge. The minimum investment that is required for a viable transcription shop is $2 million.

Venture capitalists are also wary of the mom-and-pop shops. "The quality of an Indian graduate is far less than that of an American. And this is a business that requires 100 percent accuracy. Can Indian companies ensure that?" asks a financial analyst who works with a venture capital firm. Hales is a stickler for accuracy too. "If a plane had a safe landing rate of 98 per cent, would anyone fly it? In this business, quality is king," he says.

One of the most important reasons for the insistence on 100 per cent accuracy is that though medical transcriptionists actually do the transcription, the ultimate legal responsibility for what is put down on paper rests with the doctor.

Companies such as HealthScribe are banking on the quality quotient. Ironically, most of the smaller shops try to compete on price - in a market where quality is king. At best, such shops will be able to net the smaller hospitals in the US, without in any way compromising on 100 per cent accuracy. Incidentally, HealthScribe charges way above the market rate, and yet the work comes pouring in, say company officials.

But yes, the opportunity is big. The US needs transcriptionists at about 35,000 per year, while it only has 350,000 - and the number is static, and could even be declining, according to some industry studies. Currently, the outsourcing of medical transcription stands at $1.5 billion. $4.5 billion worth of transcription is still done in-house. This will certainly change, as hospitals are unwilling to invest more in what is essentially a secondary insurance driven industry.

Doctors are overworked. The US medical transcription industry cannot cope with the demands. There's opportunity for those are ready to play the waiting game and have the appetite to take risks.

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