21 Mar 12 Demand for healthcare outsourcing set to escalate

HCL Technologies, a leading global IT services provider, will work with Blue Shield of California and use its iCRM web based tool, Proprietary ICD 10 Transformation Framework, to help the company with its ICD 10 remediation. This will help Blue Shield to meet the mandatory compliance date of October 2013. The tool will ensure transition of people, processes, and technology from ICD-9 to ICD-10.

This latest deal is just one of the many that the outsourcing companies are likely to sign in the next couple of years. The United States healthcare industry is undergoing a period of massive changes with multiple factors contributing and now converging, the next two years will be the most dynamic. The article primarily talks about the changes and the role of outsourcing.

Healthcare reforms – This definitely has been one of the biggest triggers leading to an increase in interest in outsourcing. To improve public accessibility to healthcare services, and improve the overall quality of the care that people receive, the government has initiated some mandates. These cover:

  •  ICD-10-CM and ICD-10-PCS will replace ICD-9-CM (Clinical modification) code set and the deadline to meet this mandate has been set at 2013
  •  Other regulations require rigorous auditing and reporting requirements, better insurance coverage for children and adults, increase access to recommended preventive services without cost, expansion of Medicaid eligibility and subsidized insurance premiums, among others
  •  HIPAA standards that establish national standards for electronic healthcare transactions, reinforce privacy standards, transactions and code set standard and security standard
  •  Complex rules for Medicare and Medicaid and health information technology standards

As payors rush to meet these deadlines they are facing an acute shortage of people, knowledge and time. With IT and BPO companies coming up with services and products that can help them tide over these predicaments and avoid penalties, outsourcing becomes an attractive proposition.

Change in disease profiles and changing demographics – The increase in chronic illnesses and longer life spans, have created significant demand pressure. More than 75% of US health expenditures are estimated to be related to chronic diseases. The proportion of preventive care and medicine has increased to tackle lifestyle diseases such as diabetes and cardiovascular ailments. A demographic shift can also be seen as older population (65 years or older) in the US is estimated to increase from 39.6 million in 2009, representing 12.9% of the total population to 72.1 million older persons by 2030. This increase can be attributed to continuous decrease in birth rates and increase in life expectancy. A demographic imbalance shift is a major concern as the large pool of people who need care and wellness services, will have fewer people to administer these services.

To meet the increase in volume and ensure that all procedures and compliances are adhered to, more and more companies are looking to include outsourcing in their strategic plans. In addition they are also utilizing the knowledge services offered such as analytics, quote generation, compilation of claims history, employee census files, medical history data, and wellness management among others.

Outsourcing companies are rising to the occasion by offering services and products that will help the payors not only meet the deadline but also achieve it at a much lower cost. An indication of maturity is increase in terms of complexity of processes outsourced. The demand shift has led it beyond cost and labor arbitrage. Buyers expect value added services to achieve maximum customer satisfaction. With the combined offering of technology, services and knowledge the companies are able to leverage the maximum benefits from the outsourcing deals.

ValueNotes Research
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