Revenue from healthcare BPO to triple by 2011

Healthcare BPO service provider Zavata India's $80 million contract with four major US hospitals in November last year is a healthy example of the booming healthcare BPO services sector. Offshoring of healthcare revenue cycle management services is set to gain traction this year, with Zavatas deal likely to set a strong precedent for more contracts involving turnkey end-to-end revenue cycle management (RCM) services.

A range of services beginning from the admission to post-discharge of a patient including medical coding, billing, medical transcription, claims generation, patient follow-up, et al are referred to as revenue cycle management. More than half of the US hospitals are directly or indirectly offshoring various components of healthcare services, offshore vendors can now expect more end-to-end work, according to a recent report by Pune-based market research firm ValueNotes.

The study says the share of work from hospitals forms 20% of the total medical billing and coding work offshored to Indian vendors. Although the market is currently small, total revenue earned by players in 2006 was $125 million.

This is expected to more than triple by 2011, while the number of employees engaged in billing and coding will increase to 17,500. Rising cost pressures, coupled with increasing workload are forcing healthcare institutions to explore outsourcing and offshoring options. At present most offshore vendors focus on either large hospitals or the physician market space.

In future, vendors offering RCM services can look to tap a huge opportunity from the relatively un-addressed and large segment consisting of midsize hospitals in the US. So far, this segment had been beyond the radar of most vendors, but the Zavata deal, which demonstrates the rising comfort level with offshoring by mid-sized hospitals, is likely to spark off a new wave of deals. Arun Jethmalani, CEO of ValueNotes, says, A trend we are seeing is the increasing ability of Indian vendors to provide end-to-end services for healthcare RCM. Related to this is the likely increase in penetration of offshore vendors into the hospital segment.