Monday, February 19, 2007

Medical transcription is fastest-growing BPO sector

With an expected annual growth rate of as much as 90% percent in each of the next five years, the Philippine medical transcription (MT) industry will outpace growth in the high-profile contact center industry, making it the country’s fastest-growing business process outsourcing (BPO) sector. The sector is estimated to have generated revenues of US$ 75 million in 2006.

Membership in the Medical Transcription Industry Association of the Philippines, Inc. (MTIAPI) has increased from 46 to close to 70 firms in the past 12 months, a trend supporting the optimistic growth forecast. MTIAPI is a non-stock, non-profit industry organization and works closely with government and the business process outsourcing (BPO) industry to support the MT sector in the Philippines.

According to the Board of Investments data, the MT industry registered total revenue of $70 million in 2005, up from $42 million posted in 2004. Industry figures for 2006 have yet to be consolidated, but official projections estimate 2006 revenue at $75 million.

The U.S. is the largest market for Philippine MT service organizations (MTSOs). Josephine Gonzalez, senior corporate relations officer at SPi Technologies and Chairperson of MTIAPI, said the high demand for offshore MT services is the result in part of the Health Insurance Portability and Accountability Act (HIPAA), a 1996 law which requires all medical records to be archived in digital format.

This Act, together with the increased demand from Medicare, Medicaid and U.S. insurance companies for legible patient care documentation to comply with HIPAA and a rise in healthcare spending due to a growing and aging population, is fueling the increase in MT services requirements, Gonzalez explained. “Also, the steady decline in the number of qualified medical transcriptionists in the U.S., coupled with cost pressures, has encouraged U.S. companies to offshore their MT requirements to destinations with strong English-language skills and medical understanding,” Gonzalez said.

According to ValueNotes Research, 40 percent of the MT market in the U.S. — which covers hospitals, clinics, and health management organizations, and patients seeking reimbursement for medical expenses — is outsourced to third-party MTSOs and independent contractors. Of this 40 percent, five percent is offshored to MTSOs outside of the U.S., primarily India and the Philippines. India has a 78 percent share of this market, while the Philippines has just 10 percent. The remaining 12 goes to a number of other countries, including Canada and Ireland.

While ValueNotes Research identified cultural compatibility with the U.S. and strong government support as the Philippines’ distinctive strengths, it also found the small size of the industry and the limited talent pool as weaknesses that have kept the industry from achieving its full growth potential. In contrast, scalability is India’s unique selling proposition — a strength that reflects the large size of the MT industry and labor pool.

In response to increasing demand, however, BPO companies with operations in the Philippines that haven’t provided MT services previously are beginning to do so. PeopleSupport, one of the Philippines’ leading contact centers, is one such firm. According to Evelyn Abat, Program Director of PeopleSupport’s MT Division, the company’s significant technical and infrastructure resources, previously underutilized during regular working hours, and its corporate commitment to help grow the nation’s economy by creating jobs, were factors that led PeopleSupport to pursue the MT vertical 10 months ago. PeopleSupport now offers MT services as well as higher value transcription services such as broadcast, entertainment, offline transcription and captioning.

But there are continuing challenges. According to Abat, although PeopleSupport’s reputation as a leader in the customer service management industry has helped the company recruit top talents for its MT initiative, building a team of qualified transcriptionists proved to be a major setback.

“Our global brand is the greatest asset in our sales and marketing efforts and in convincing U.S. clients to send us work. Still, it was quite a hurdle to initially migrate our existing MT business from the U.S. to the Philippines because of the general impression that we do not yet have the qualified manpower to do the job,” Abat added. “As a start-up division , building competency and convincing clients that we have the capability and the expertise to deliver the work is an ongoing challenge.”

Abat believes that it is possible to further accelerate the growth of the MT industry, provided two conditions are met. First, it is important to build a large pool of qualified medical transcriptionists to achieve scalability; and second, country marketing, or promoting the Philippines as a destination of choice for high-quality and low-cost MT services is critical to correcting inaccurate perceptions of the Philippines.

MTIAPI is aggressively addressing both these issues, said, Myla Rose Reyes, who is President of the association and Managing Director of Total Transcription Services, Inc. Aside from partnering with the Technology and Skills Development Authority (TESDA) to develop a standard MT curriculum and working on the standards to professionalize the industry, MTIAPI has also been marketing MT as a viable business and long-time career through seminars, forums, and trade shows such as e-Services Philippines (ESP), an annual global sourcing conference and exhibition organized by the Center for International Trade Expositions and Missions (CITEM).

“ESP is a good venue to showcase the MT sector. We expect high-level executives from the international health information management industry to attend this year, and we have already received a number of inquiries about MT in the Philippines in response to marketing communications for the event,” Reyes said. “By participating in ESP, we hope to achieve better visibility locally and internationally, and make MTIAPI the first stop for all MT-related inquiries from potential investors.”

ESP 2006 is scheduled on February 15 to 16, 2007, at EDSA Shangri-la Hotel. For more information, visit


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