10 Things to Know About
Offshore Healthcare Outsourcing

By Jonathan Friedman, MBA, CPC, CEO, PRN Advisors

Businessman holding the world in the fingers

I have spent a good part of the past 10 years traveling overseas, immersing myself in foreign cultures and learning the idiosyncrasies of working in different countries. As a result, I am frequently asked about outsourcing healthcare-related services to overseas operations — the pros and cons, but sometimes just about the reality of these types of engagements.

In this article I will discuss what I have found to be the typical reality of working with overseas companies and identify 10 issues to consider when working with an overseas company.

1. HIPAA — One of the top issues of concern for healthcare organizations considering whether to outsource a service(s) to a foreign operation is the protection of personal health information (PHI). It is imperative to make sure a HIPAA risk assessment of the operation is completed and proper security measures are in place to protect PHI. Ask for the operation’s risk assessment plan and a description of its security measures. Security measures should include such items as utilization of “dumb terminals,” (terminals without a hard drive for storage), lockers for employees to store cell phones and other devices capable of taking pictures, security cameras and limited printers in locked offices to help prevent the printing of information containing PHI. .

2. Service, service, service — Many colleagues have experienced a great deal of frustration when trying to interface with a knowledgeable client representative here in the U.S. or abroad. I have worked with over 20 overseas companies and the lack of responsiveness, client service and the inability to get to the right people can definitely be frustrating. Work to address this with your overseas partner prior to it even becoming an issue. Include contractual language that identifies your service person, the process that is in place in the event that this person leaves the organization, and expected levels of service.

A common strategy used by overseas companies is to outsource their work to other companies. It makes sense. Workload can sometimes becomes more than expected, and affordable and capable labor can often be found at smaller companies. Relationships between larger and smaller companies are forged for the sake of mutual benefits. Ensure your contractual language states that you will be notified before any of your workload is parceled out. An annual audit (see #8) of overseas operations during the year may help uncover any undisclosed outsourcing of your work.

3. Language and culture — I frequently hear about the frustration experienced when trying to understand somebody from another country. Although people from various countries speak English, their command of the language and accent will vary. Patience is a virtue that is important for a successful relationship to evolve. This is true of all relationships, including those you work to establish with individuals from other parts of your community, state, country and the world. As time passes, you will likely acclimate to the accents of those overseas representatives with whom you are communicating.

It is worthwhile to take the time to understand their culture. There are very capable people within all organizations with a great desire to achieve goals and objectives established. Clients will sometimes tell me they get frustrated because individuals from one particular country always give an affirmative answer when asked if a function can be performed. This representative is likely not trying to deceive the client; rather, it is the individual’s culture to always want to please and do what is right for the client. In these scenarios, an affirmative answer needs to be followed up with further discussion to help ensure the representative’s company is capable of performing the task and in the manner you require.

4. Turnover — It is important to recognize that turnover of staff is a constant issue faced by most companies, including overseas operations. People will move due to greater compensation, a better position, location, and improved hours — sometimes with little or no notice. It is not unusual to have a turnover rate of between 30-50% at some overseas companies.

Ensure the team members you will work with are trained, there is appropriate supervisory staff in place and the company uses audit processes to measure and monitor staff performance. If you find the team that was originally working on your account to be completely turned over with “freshers” (freshman) who are still in the training period of their job, speak up and request that the team be comprised of a mix of freshers and experienced workers.

5. Key performance indicators (KPIs) — Make sure there is a clear understanding of performance expectations as you would have with any outsourced company (national or international) and internal operations. Overseas operations should have daily, weekly, monthly and quarterly reports. These reports should reflect performance, productivity and operational assessment. The KPIs measured should be very specific and agreed upon by both parties. They may include measures encompassing productivity, efficiency and outcomes.

6. Policies and procedures — Any overseas operation to which you outsource should have policies and procedures in place so you know how functions are managed, discrepancies handled and documented, reports disseminated and communications managed between headquarters and outsourced offices. You will want to have a good understanding of how these processes will be performed in a secure manner. You do not want to leave anything to chance. If you do not keep an eye on policies, procedures and KPIs, you may find a small problem can become much larger before it is identified.

7. Location, location, location — There are variables to weigh when considering outsourcing to overseas operations. Access to electricity is a very real concern. Ensure there are backup generators available and they are tested regularly. Depending on the country and even the part of the country, electricity could be a major issue. As overseas operations grow, companies will sometimes expand or move operations to “secondary” cities where there is a cheaper workforce and lower overhead. When this occurs, access to the Internet and phone lines may be compromised, as might access to reliable power sources. Ensure your contract indicates the location of the offices and notification of the relocation of any workforce. Annual audits may also uncover undisclosed utilization of secondary cities

8. Auditing and compliance — When reviewing contractual language, make sure there are policies in place for audits accompanied with a strong compliance plan. I personally prefer the hybrid approach where select functions are performed overseas while others are performed here in the U.S., both with appropriate oversight. I also believe the expense of having an independent healthcare attorney or certified auditor in the U.S. to oversee the compliance program and perform audits is a worthwhile investment.

9. Costs – Yes, the cost associated with outsourcing a function to an overseas operation can be very appealing. For example, a charge entry person overseas may cost approximately $20,000 annually while the same person working in the U.S. may cost over $40,000, not including benefits and the cost of management oversight.

While the savings of outsourcing can be substantial, there is a hidden cost that is often overlooked. Working with overseas operations still requires management of the operations. You need people who will oversee all functions performed abroad. This is a cost many organizations do not take into account, but it can represent a great opportunity for members of the current workforce to develop their auditing, management and leadership skills.

10. Perception — Outsourcing is not going away, despite the negative perception that is sometimes associated with it (some of which is justified). There is logic behind the performance of functions that does not compromise quality by a more affordable solution. It is up to you to decide which functions you feel comfortable outsourcing.
In healthcare, for example, I personally support coding performed here in the U.S., work with a large contingency of U.S.-based coders and strive to find capable Americans jobs at various institutions. The ability to complement and augment such staff when it is necessary can be a tremendous advantage.

Why I Value Outsourcing

Over the years I have developed strong relationships with many overseas companies, and have gained the ability and comfort to work with an overseas team. As with any relationship, chemistry is an important component of creating a successful workforce. I commit to building a strong team here in the U.S. that is trained in working with overseas teams. When you can effectively collaborate with an overseas organization as a true partner, and understand and respect its values and culture, it collectively makes for a stronger company and will expand your organization’s capability.

We are a global economy, and there is much we can learn from other industries that utilize overseas operations. My feeling is you either develop this skill set or risk being left behind.