Healthcare IT Outsourcing - India Gears up to the Challenge

Outsourcing of IT services to India started to gain momentum during the Y2K crisis and has come a long way since then. Today, more than 300 of the Fortune 500 companies outsource some part of their technology and business processes to India. The healthcare industry, however, has been slow to adopt this trend.

According to a Gartner study, 60% of healthcare organizations will outsource more than half of their IT operations by 2007. Coupled with an increase in outsourcing of business processes, this creates a large opportunity for offshore providers tapping the healthcare market.

In the healthcare industry, payers and product vendors have been early adopters of outsourcing to India, with most of the large players already leveraging the availability of a technical talent pool. Providers have been relatively slow in utilizing services of offshore service companies.

Some of the organizations active in offshore outsourcing are:

• Cigna
• Aetna
• Several Blue Cross organizations
• United Healthcare Group
• Kaiser Permanente
• Henry Ford Health System
• McKesson
• Cerner
• Siemens
• Misys
• Isoft

There are 15 to 20 large and midsize vendors in India that provide IT services to the healthcare market in North America and Europe. About 8,000 professionals are involved in the healthcare informatics segment, primarily serving the needs of these markets. The services provided are mainly centered on application maintenance, system integration, application development, product re-engineering/maintenance, HIPAA consulting, and e-business initiatives.

Recently, multinational players such as Accenture, EDS, CGEY, FCG, Keane, and IBM have established a presence in India and are hiring professionals, leading to an increase in wages that still average $8,000 per year for entry-level software engineers.

The segment growing faster than IT services is business process outsourcing (BPO), which includes insurance claims processing, adjudication, receivables management, medical transcription, and billing and coding services. Clinical process outsourcing such as radiology reporting is beginning to take off as well.

The healthcare industry's slow pace of offshore adoption is due in part to the fact that many IT service providers lack the necessary healthcare domain expertise. However, Indian companies are addressing this weakness by hiring professionals with healthcare domain knowledge. Moreover, vendors are investing in building knowledge of healthcare informatics standards such as HL7.

The HL7 affiliate in India has been active for the past five years and will generate more than two hundred HL7-certified professionals by the end of this year. Similarly, professionals in India are being trained in other standards and languages, such as Digital Imaging and Communications in Medicine (DICOM).

Contrary to popular belief, the major players in the offshore IT and BPO markets in India adhere to HIPAA-compliant security policies and procedures, which are audited by HIPAA consulting organizations, thereby ensuring privacy of medical records. In fact, the Indian government is considering a proposal to implement data protection laws in India, and HIPAA privacy and security regulations may be adopted with minor changes.

Strange as it may sound, one of the major concerns of IT services vendors in India is whether there will be enough qualified professionals to meet the outsourcing demand boom in the coming years. Several Indian vendors have already set up shop in China to mitigate this risk.

Saji Salam, M.D., is Chairman, Health Level Seven India. He is currently based out of Minneapolis, US with one of the largest offshore IT consulting companies, and can be reached at saji.salam@cognizant.com