Outsourcing and IT Services Anticipate Boost From Healthcare Reform

by: Outsourcing Insider

A few months back I wrote an article on how outsourcing has already been helping with cost reductions in the Healthcare Industry, and with the recent passing of the U.S. Healthcare Reform Bill, many are anticipating an increase in business opportunities in this sector.

I.T. industries in India are among one of those anticipating new businesses in the health sector. According to Satish Menon, associate VP (corporate finance healthcare advisory), KPMG, Infosys (NASDAQ:INFY) would be one of the beneficiaries of the reform since it’s already in their line of products and an established robust clientele. Wipro Ltd. (NYSE:WIT) is optimistic as this reform would be at the intersection of its strategic units of health care and government said Rajiv Shah, senior vice president, healthcare vertical, at Wipro Technologies. Another company that has already had a strategic deal with a US-based healthcare insurance provider that involved taking over part of its operations in El Paso, US is Patni Computer Systems Limited (NYSE:PTI).

Outsourcing companies such as Kelly Government Solutions, a division of Kelly Services (NASDAQ:KELYA) , was recently awarded a $750 million contract to provide the National Institutes of Health, an agency of the U.S. Department of Health and Human Services, a wide array of professional, scientific and technical expertise in support of its missions. Genpact Limited (NYSE:G) was considering acquiring firms in the healthcare space who provides services like revenue cycle management, process optimization and revenue clinical and non-clinical supply chain management for both payers and providers.

It’s not just outsourcing companies who will be cashing in on the prospect. Some, like oDesk, a virtual outsourcer, along with Guru.com and Elance, will also benefit from this bill since they have already started offering health insurance to its workers. Other BPO firms like Firstsource Solutions Limited (BOM:532809) which has 37% of its revenues derived from the healthcare sector would increase onshore presence in a bid to provide clients with a comfort level. And still other companies that would not provide direct services related to the implementation of healthcare could still cash in like Hewitt Associates, Inc. (NYSE:HEW) is doing, which is providing independent analysis of the bill and its implications to employers, individuals and insurance companies.

The U.S. market opportunity is estimated to be around $25-30 Billion. As for the question of how large a part the IT and outsourcing industries will play in providing services such as medical transcription, insurance and claims processing; the answer is still unknown. It would be largely dependent on the unique combination of cost advantage and quality these companies would be able to provide. And even though there is a positive outlook on future prospects, experts warn to approach this step with caution. Companies that would want to dive into this opening should be able to maintain quality support in this sector as well as be prepared legally as litigation cases related to healthcare in the U.S. are frequent.

With the passing of the U.S. Healthcare reform Bill, its consequences and future ripple effects into the U.S. society can not be determined for certain. One thing is sure however, the bill will be supported by billions of dollars upon implementation and in the end that money has to go somewhere. It’s up to the companies to make sure they have a slice of that pie. It will be years until the bill will be able to reach its full potential but as they say, “the early bird catches the worm, or in this case the multi-million contracts”.

Disclosure: No position