With the passage of the historic, although much maligned, Obama healthcare reform bill in the US, a new opportunity has opened up for outsourcing companies as hospitals and insurance providers will now be seeking ways of minimizing expenses.
Since the Obama Healthcare Reform bill was passed on the 23rd of March, the news has been all a-flutter with the potential benefits that this bill presents to outsourcing providers. According to Nasdaq and the Times of India , outsourcing firms such as Firstsource Solutions (NYSE:FSL BOM:532809) and WNS (NYSE:WNS) are now planning to increase their onshore presence in the US to help them win contracts by expanding their relationships while maintaining potential clients at arm’s length, building trust. Other companies such as Genpact (NYSE:G) in the meantime, are looking for possible mergers and acquisitions with other companies so that they can broaden their expertise and take advantage of more business from the healthcare industry. The company is said to be searching for companies that offer revenue cycle management, process optimization and clinical and non-clinical supply chain management for insurance firms and providers.
The bill however, does not pose a large scale opportunity for technology outsourcing providers such as HP EDS (NYSE:HPQ), and IBM (NYSE:IBM), as existing technology platforms will likely remain as is. It will be business process outsourcing providers (BPO’s) who can offer front and back office assistance to clients who will benefit more from the bill as potential clients like insurance providers will need to focus more on key business processes. Analysts speculate that several other different companies including Patni Computer Systems (NYSE:PTI), Cognizant (NASDAQ:CTSH), Infosys (NASDAQ:INFY) and Wipro (NYSE:WIT) may also benefit from the bill.
The bulk of new business will likely come from customer enrollment, customer service, and claims processing, as insurance becomes universally available to US citizens. Different outsourcing destinations such as the Philippines, India, Mexico, and China will probably be clamoring to get the lead in healthcare outsourcing; however, it is likely that those who will benefit the most from the bill are those that can offer onshore capabilities or those that are near shore, such as Mexico and Canada.
With the bill now in place, it is estimated that about 32 million people who were previously not eligible for insurance can now apply, and subsequently avail of healthcare services (e.g. medical transcription outsourcing) through insurance providers. The sheer number ensures that many providers will soon be seeking assistance in the processing of, not just the new enrollees, but their existing clients as well. Insurance providers who were previously hesitant about availing of outsourcing services will now have to take a long hard look at their options, especially as competition will be tougher than ever in their industry. Of course with that, competition to gain big profit from healthcare services will also be tougher in the outsourcing industry as well.
And although Obama’s healthcare reform bill is not looked upon too favorably by some in the US, outsourcers all over the world are cheering the passage of the healthcare reform bill and are getting ready to reap the benefits.