Transcription Services for Medicines and Surgical Operations

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Table of Contents

Executive Summary
Introduction: Current Marketing Situation
What is transcription?
Can it be outsourced?
Justification for outsourcing transcription services
SWOT analysis
Conclusion
Reference List

Executive Summary

Prasad & Prasad (2012) indicate that research and development into new ways of producing and utilizing technology is one of the practices most often seen in technology intensive enterprises. This is due to the fact that technology has, as of late, been under a constantly accelerating level of development and, as a result, has enabled new players to enter into markets whereas in the past distinct barriers to proper entry would have been present (Prasad & Prasad, 2012). As such, failure to sufficiently innovate along with new technological trends and products can be thought of as a failure on the part of the managerial practices at an organization since being able to anticipate trends and use them to either reach greater market penetration or keep the company relevant to consumers is a necessity in today’s technology intensive market economy (Prasad & Prasad, 2012). It is within this context that the outsourcing of the medical transcription department of the hospital is being advocated. Through the use of outsourcing services, the hospital will be able to save hundreds of thousands a year through differences in minimum wage rates since transcriptionists located in India or the Philippines have far lower salaries as compared to their U.S. based counterparts.

Introduction: Current Marketing Situation

Companies often encounter boundaries when it comes to creating efficient business processes whether in the form of distance or differences in business culture, however, by overcoming such boundaries better business operations can be attained. As indicated by Bikman (2007), in order for any company to continue to be competitive within the present day global market place, it is necessary for it to be highly responsive to changes, receptive to new developments within its market, highly creative as well as espouse actions of innovation and continued increase in efficiency. Corporate executives are under pressure to improve the competitiveness of their companies through cost reduction, increased efficiency as well as the improvement of various services. It is due to this that they have been turning towards outsourcing as of late in order to resolve such issues (Bikman, 2007).

What is transcription?

Medical transcription is actually a relatively straightforward process wherein transcriptionists write down the voice recorded message of physicians into a text format. This method was done in order to increase the efficiency of hospital services by having another department deal with handling the transcription records and assigning them to the correct patient. Through this process, doctors have more time to devote to other potential concerns (i.e. taking up more patients) which helps to boost the efficiency of the hospital.

Can it be outsourced?

When examining the processes utilized in transcription, it can be seen that it can definitely be outsourced. There already several companies that offer transcription based services and all that would be needed is to forward the appropriate audio files to them.

Justification for outsourcing transcription services

Outsourcing is a term used to describe the practice of contracting a particular business function whether in the form of manufacturing, accounting, customer service etc. to an outside provider for the express purpose of reducing operating costs. For example, as indicated by Lowes (2004) the main cost of doing business within the U.S. is related to local taxes, employee salaries as well as federally required health benefits and insurance services. Such factors drive up the cost of doing business within the country due to the amount of money that goes into them. On the other hand, outsourcing aspects of a company’s functions to locations such as China, India and the Philippines reduces these particular costs due to lower tax rates, lower minimum wage requirements as well as the far lower costs of employee benefits (Lowes, 2004). In the case of China, the low minimum wage combined with the low cost of doing business within the country resulted in more companies outsourcing their manufacturing services to the country between 1990 to the present. This particular situation is not unique to China but can similarly be seen in India and the Philippines where business process outsourcing has become a $100 billion a year industry. It should also be noted that transcription based services do not require significant levels of professional training in order to be accomplished. Forsman Jr. (2003) delves more into this issue by explaining that one to two weeks of training can create a reasonably effective medical transcriptionist. As such, since there are fewer barriers to entry for this particular type of position, it would seem that it would be the most likely to be outsourced. Since medical transcription from U.S. based medical institutions require competent English speakers, the best location to outsource such services would be to India or the Philippines where there are large populations of English speakers that consider English as their second language (Forsman Jr., 2003). The end result of such actions are lower operating costs for the hospital since medical transcriptionists located within India or the Philippines have far lower minimum wage salaries and do not require the same extensive medical insurance coverage that is required for employees in many of today’s U.S. based hospitals.

SWOT analysis

Strengths

The main strength of outsourcing is that it can reduce the cost of the hospital’s overhead without having to reduce essential personnel. Since the act of transcription does not necessarily need a person with a medical degree to write it, anyone with a sufficient understanding of English can be trained to become an effective transcriptionist so long as they understand the various terminologies involved.

Weaknesses

Outsourcing should not be considered the “go to” solution when it comes to reducing corporate expenses. Utilizing the example of Dell and the faulty maintenance procedures that resulted from outsourcing aspects of the company’s operations, it can be seen that by not keeping things “in-house” this actually exposes the company to a multitude of possible problems related to mismanagement and improper operational practices that would not have occurred if they had been done by the main company instead of an outsourced firm (Trade Groups to Lawmakers: Support Overseas Transcription, 2004). This shows how problems can occur in numerous areas of a company’s operations as a direct result of outsourcing which can have dire consequences for consumers and businesses alike.

Opportunities

Since there is already an established set of companies that provide transcription based services, the hospital will not need to expend funds to create its own outsourced transcription centre in another country. It can rely on an already established centre with competently trained personnel to handle all the concerns it may have.

Threats

Working across boundaries such as distance and business culture is advantageous for any company due to access to a greater talent pool and product markets, however, the fact remains that along with such advantages comes distinct disadvantages in the form of ill-suited management practices in dealing with a diversified global workforce and the potential for problems in a company’s supply chain due to lax standards on the part of their international partners (Trade Groups to Lawmakers: Support Overseas Transcription, 2004). For example, lax management practices in the form of insufficient quality control procedures as well as improper sales and repair procedures were blamed for one of Dell corporations recent fiascos (occurred in 2006) wherein faulty components within several of its laptops that were sourced from foreign partners were seen actually leaking some sort of fluid during normal operational processes and had the potential to burst into flames. This particular lax attitude should not occur within the context of medical transcription services since it could lead to a patient dying of an overdose.

Objectives

The main of objectives of this proposal are to:

Reduce Costs for the hospital
Increase hospital efficiency

The reason for outsourcing transcription services

As of late, the current economic downturn has affected local markets to such an extent that the rate of people who are going to the hospital for the past few years has dwindled considerably due to either a lack of funds, no insurance as well as a variety of other financially based reasons. As the U.S. economy is estimated to barely reach a 1% growth rate by the end of 2013, this signifies a concurrent decline in spending making the future of the medical industry uncertain in light of the possibility that patient spending within the country may continue to be in decline for the next 3 or 4 years due to the lack of sufficient economic expansion. To remedy such an action, manufacturers have outsourced their business processing and production centres to locations such as the Philippines and China in order to reduce the cost of labour for their products and services during this economic downturn. The problem the hospital currently faces is the fact that it needs to be able to lower its cost of operations while at the same time maintain its current repertoire of services (Tenet among hospitals and IDNs seeking to cut medical transcription costs with program, 2004). The best possible way to do this while still maintaining functionality would be to outsource non-essential services such as medical transcription. By doing so, this will enable the hospital to lower its operational costs resulting in a more profitable rate of functionality in light of the need to reduce financial burdens in the current market economy.

Benefit for the hospital

The main reason behind implementing an outsourcing strategy in the hospital are the cost savings involved in hiring a local within the Philippines, China or India as compared to hiring someone from the U.S., U.K. or Canada to do the exact same type of job. Minimum wage requirements, taxation and other costs related to doing business are simply far lower in various places in Asia as compared to countries in the “West” and, with the integration of global financial markets and supply chains due to globalization, it has now become more practical to simply have certain aspects of a company’s operations (usually manufacturing and customer service) to be located in other countries with lower business costs (Egger, 2000).

Marketing Strategy

Projected cost savings

In order to convince the hospital regarding the viability of the proposed project, a project cost savings chart will be utilized in order to show how much money the hospital will save in the long term.

Projected efficiency increase

Aside from the projected cost increase, this proposal would also showcase how outsourcing the department would increase hospital efficiency.

Action Items

Outsourcing plan

The outsourcing plan is actually pretty straightforward, all that would be needed is to contact a company that specializes in outsourcing transcription services, create a contract and then send the company digital copies of the recorded voices of the doctors which will then be interpreted by the transcriptionists and sent back in text format.

Implementation Controls

Prior to instituting the process of outsourcing the hospital’s transcription services, it would be necessary to implement methods of internal management changes in order to ease employees into the new procedures. The concept of people fearing change is a well known psychological concept that is deeply embedded in the fact that humans are essentially creatures of habit. People prefer doing things a certain way, they like having routines and they enjoy a life where they follow the simple logic of “if they do this they get that”. When a certain inexplicable change is introduced into a person’s routine three possible things may occur, either:

They adapt to this new change
They resist to the change that is being induced
They attempt to adapt yet fail at doing so.

For organizations in the midst of change, the latter two responses are the most troubling since this may result in several groups of individuals either resisting the change or being unable to adapt properly, both of which would adversely affect the hospital. Going back to the first principle mentioned, it is important to take note of the fact that in order to prevent the fear of change what is needed is to gradually change the system in which a person works up to the point that they are able to accept the change as it happens (Egger, 2000). The second principle compliments the first in that it addresses the unsaid point that since people fear change it is often hard to change the individual. Thus, in order to change a person, it is necessary to gradually change the mindset they operate with in order to facilitate effective change with little adverse effects.

The last principle chosen is related to the action of having people know what is needed to be changed and thus having them choose the direction in which the change would be best implemented. While this paper has so far shown that people fear change, are often resistant to it and that in order to change a person it is necessary to change the system they work in, what was not mentioned was the fact that when the change comes from within, in that they see the necessity of change, employees often respond positively towards change and actually work towards it (Egger, 2000). In the case of the third principle by supplying a clearly defined vision of what is needed to change instead of forcing it on the personnel within a hospital, employees actually become more amenable to the necessity of change and become less resistant, more encouraging and actually contribute their own thoughts and views as to what other changes could be accomplished.

Financial Projection

Projected cost of outsourcing transcription department

The projected cost of outsourcing the transcription department would be $500 per employee per month, which is still considerably lower than the average salary of $1,500 a month that a hospital transcriptionist earns.

Conclusion

Overall, it can be stated that if this operation is implemented, the hospital would definitely be able to save significant amounts of money annually.

Reference List

Bikman, J. (2007). Medical transcription outsourcing greased lightning?. Healthcare Financial Management, 61(6), 94.

Egger, E. (2000). MedQuist prospers as hospitals step up outsourcing of medical record transcription. Healthcare Strategic Management, 18(5), 14.

Forsman Jr., J. A. (2003). Cutting medical transcription costs. Healthcare Financial Management, 57(7), 64.

Lowes, R. (2004). Overseas transcription: Is it safe?. Medical Economics, 81(12), 16-17.

Prasad, A., & Prasad, S. (2012). Imaginative geography, neoliberal globalization, and colonial distinctions: docile and dangerous bodies in medical transcription outsourcing. Cultural Geographies, 19(3), 349-364.

Tenet among hospitals and IDNs seeking to cut medical transcription costs with program. (2004). Healthcare Strategic Management, 22(9), 5.

Trade Groups to Lawmakers: Support Overseas Transcription. (2004). Health Management Technology, 25(5), 8.

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