Doctors also ship work overseas (but they don't always know it)

Offshore outsourcing can save physicians money, but can also present potential HIPAA problems.

By Tyler Chin, amednews staff. Nov. 10, 2003.

A woman in Pakistan threatened to post patient files on the Internet unless the University of California, San Francisco, Medical Center paid her money she claimed a third party owed her.

How did files on patients from San Francisco end up in Pakistan? The woman had been hired, through a series of subcontractors, to transcribe them.

See related content
Topic: HIPAA

Increasingly, technology help- desk support, transcription and other services physicians rely on are being moved out of the United States, not only to Pakistan but also to India, China, South Africa and Russia. The companies providing those services hope physicians won't notice any changes -- except perhaps for the cost savings. This is all part of a larger trend of American companies sending work out of the country because it can be done cheaper somewhere else.

In health care, transcription continues to be done mostly in the United States, but a growing percentage is being done in India. Three key factors are the shortage of qualified U.S. transcribers, the availability of lower-cost English-speaking transcribers elsewhere and a quicker turnaround time, observers say.

The American medical transcription industry is a $15 billion to $20 billion market, said Amy Buckmaster, president of the American Assn. for Medical Transcription, Modesto, Calif. About 4% of that goes to India, she estimates. Others think the figure is as high as 10%.

Although many physicians may not even know where their transcription is done, others have seen the options displayed.

"I saw at least a dozen transcription companies exhibiting," at the Medical Group Management Assn.'s annual meeting last month in Philadelphia, said Stuart Patty, administrator of Peoria (Ill.) Surgical Group. "Many are using offshore labor. I'd say four or five are run by Indians, and the rest probably have that in the background though it's not obvious, and a couple were owned by Americans." Patty's 12-doctor practice has outsourced most of its transcription needs to India.

Gartner Inc., a Stamford, Conn.-based consulting company, estimates one out of every 10 jobs in the U.S. computer services and software industry will move abroad by the end of 2004.

The migration of jobs overseas has sparked a backlash, particularly among labor unions and workers. The topic is so sensitive that some physicians declined to discuss their offshore outsourcing arrangements.

And many of these arrangements are complex. For example, several companies sell handheld-based software applications for physicians that are written by Indian software programmers, said a physician who owns such a company but asked to remain anonymous.

Richard C. Anderson, MD, a thoracic surgeon with the Illinois group, sympathizes with workers who have lost their jobs. But doctors have no choice but to use offshore services if they can get the same quality service for less than it would cost in America, he said.

"Medical liability insurance has gone up astronomically ... and Medicare is talking about significant pay cuts for us over the next several years," Dr. Anderson said. "When [critics] figure out how to improve our medical system so that we don't have to do that, we would be happy to use whoever we can [domestically]."

And then there's HIPAA

In offshore outsourcing, as with much of a physician's practice, the privacy and security requirements of the Health Insurance Portability and Accountability Act threatens to become an issue.

HIPAA applies only to covered entities, which the law defines as doctors, hospitals, health systems claims clearinghouses and health insurers. That means the U.S. Dept. of Health and Human Services cannot take action against a noncovered entity that violates HIPAA, said Wes Rishel, a vice president and research area director of health care at Gartner.

However, physicians must have a business associate agreement under which noncovered parties agree to safeguard patients' health information. Physicians "are not required to audit or affirmatively go out and determine that their business associate is following the agreement," Rishel said. "But if they are notified that the business associate is violating the agreement, they are supposed to take steps to correct it. They are on the hook if they are notified of a problem and ignore it." Also, while doctors can't be sued under HIPAA, they can be sued by patients under state privacy laws, Rishel said.

The UCSF Medical Center, threatened with the release of its files transcribed by the Pakistani woman, told the San Francisco Chronicle that it did not know its files had been transcribed in Pakistan. (The center did not comment for AMNews.)

The medical center had given dictation files to Transcription Stat Inc., of San Francisco, according to the Chronicle. The files then made their way to a couple of American subcontractors before reaching the Pakistani transcriber. She e-mailed her threat to UCSF after the subcontractor that had retained her apparently failed to pay her. She withdrew the threat after another subcontractor paid her.

The transcription group's Buckmaster advises that physicians know where their transcription is being done, make sure the documentation is secure, and make sure it is being transcribed by qualified personnel.