April 27, 2007

After BPO, it's medical outsourcing

Even as uncertainty continues for thousands of Indian doctors with career plans abroad, the medical fraternity back home has a reason to cheer.

In what could be the next big step in the outsourcing saga, big corporates in the US are planning to offshore their employee healthcare to India.

Wal-Mart hires over a million employees in the US – spending $8,000 on each employee's healthcare every year takes its total expenditure to a staggering $8 billion. What if Wal-Mart could save 90 per cent of that amount with help from us?

As health insurance gets painfully expensive in the US, huge cost advantages of medical procedures in countries like India are proving to be irresistible for companies there including those on the Fortune 500 list.

Mercer Health & Benefits Dr Arnold Milstein said, “We estimate that the price advantage for the most efficient Indian hospitals would be around 85 per cent to 90 per cent."

American companies are obviously feeling the heat. Many believe that unless they control the spiraling health expenditure their profits could start taking a serious hit by 2008.

A study suggests that outsourcing of health care can easily reduce the showroom price of a GM car by a thousand dollars – it's all very simple logic so what's the problem?

Outsourcing of business processes itself is a very controversial issue in the West. Outsourcing of healthcare, which requires a degree of intimacy withy the patient can be a tricky issue.

As US still recovers from the shock of its inability to provide efficient healthcare to its people India waits with open arms.

Escorts Heart Institute and Research Centre Director Dr Naresh Trehan, Executive said, “We have patients coming from there on a regular basis so far mainly those who are uninsured if you say the trend, I think it's three times today than what it was two years ago."

Medical tourists coming to India may not be a new phenomenon but so far most of those have been without adequate insurance cover. Considering that just around 15 per cent of the Americans are uninsured, there is room for a lot more business for our health care industry - but are we ready?

Dr Naresh Trehan says, “The number of people who are coming and the pace at which it is developing I don't think it's going to overrun our systems. A lot of new capacity is coming on line.

According to current trends, India's health care industry is going to be $47-billion- strong in another 5 years and if American companies decide to play ball that figure could easily double in the years to come.

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