India Healthcare BPO 2013 – ICD-10 conversion next Y2K of healthcare

The US healthcare industry is about $1.8 trillion in size and is expected to be about $2.5 trillion by 2018. The healthcare revenue cycle market (claims processing) is estimated to be about $11 billion segment representing only the provider segment and in this segment around $3 to $4 billion is outsourced globally and Indian healthcare BPO vendors currently have a  share of only about $300 to $400 million. Claim processing and settlement, i.e. healthcare revenue cycle management, is one of the core services in the health insurance industry and has to be handled promptly and accurately and Indian vendors are handling this work effectively. The Indian Healthcare BPO story started with basic claims processing (data entry) and over time India has become preferred destination for US Healthcare and Insurance companies to outsource their medical coding work including in-patient coding work, which is a complicated process. There is also a lot of growth in the claims adjudication space and other insurance company related work that is being done in India. The global healthcare BPO market is growing at a CAGR of 21.4%.

Healthcare provider outsourcing has the highest growth rate of 31.9% from 2013 to 2018 because of the conversion from ICD-9 coding system to ICD-10 coding system to be implemented by October 2014 in the US. Healthcare payer outsourcing market will also grow at about 30% in the forecast period. Omega Healthcare President and CEO Gopi Natarajan explained that the transition of the medical coding process from ICD-9 (The International Classification of Diseases) to ICD-10, a standard used in the US to classify diseases, is slated for October 2014 throughout the US, and is expected to be a huge boost for the outsourcing industry. Manish Hemrajani, Executive Director and Senior Analyst at Oppenheimer & Co. Inc. says Genpact, EXL Services  and WNS have traditionally served the BFSI verticals, but they are now moving increasing their exposure to health care, one vertical where he expects meaningful growth. He says the transition from ICD-9 to ICD-10 is expected to translate into a meaningful amount of business. “The differences between ICD-9 and ICD-10 are significant, and none of the payers or providers in the health care industry are ready for it with a deadline set for October 1, 2014, and that’s where the BPO vendors come in. So you’re going to see a meaningful growth coming from health care in this space. Some are touting it as the Y2K of health care.”

ICD-10 is the new version of the World Health Organization's International Classification of Disease. The 155,000 codes in this massive compendium are used on everything from hospital records to insurance claims to death certificates. Most of the Indian Healthcare BPO vendors have set up separate practices for this and are well prepared to offer the conversion services to the US clients. ICD-10 is going to require a large amount of changes and training the new codes will affect medical collections for both patients and providers. Indian Vendors help the clients in transitioning their systems and coding mechanisms to the latest ICD 10 system and also help in providing training that is required to use the codes. Practice managers or billing staff must be trained on all the details of the new system, patients too have to know about the coding changes will impact the amount they pay on insurance claims as well as nurses, doctors, and other staff members that will come into contact with diagnosis codes. 

Discussion Points: 
1.How are Indian Outsourcing vendors targeting the ICD-10 conversion projects and are they profitable? 
2.What type of talent and skill sets required for ICD 10 conversion projects and availability of talent in India?
3.Since ICD 10 conversion is a temporary project, what should Indian vendors do post the expiry of conversion projects?