Indian BPOs Likely To Gain From U.S. Health Care System Overhaul
March 23 2010 - 12:07PM
Dow Jones News
India's outsourcing firms will gain new orders after the U.S.,
one their largest markets, is overhauling their healthcare system,
which could call for insurers and healthcare providers to cut
expenses.
The U.S. House Sunday gave final approval to a far-reaching
health-care overhaul bill promising to bring health insurance to 32
million Americans while subjecting U.S. industries to a
dramatically redrawn and newly regulated marketplace.
BPO companies such as Firstsource Solutions Ltd. (532809.BY),
WNS Holdings Ltd. (WNS), Patni Computer Systems Ltd. (532517.BY),
Cognizant Technology Solutions Corp. (CTSH), the BPO units of
Infosys Technologies Ltd. (500209.BY) and Wipro Ltd. (507685.BY)
may benefit, say analysts.
"This reform is at the intersection of two of Wipro's strategic
business units--health care and government--and we are geared up to
address the technology requirements in these sectors," said Rajiv
Shah, senior vice president, healthcare vertical, at Wipro
Technologies.
Wipro Ltd. is India's third-largest software exporter by
revenue.
Analysts expect the U.S. government to spend about $15 billion
to $20 billion on healthcare technology services, a major share of
which is expected to come to the Indian business process
outsourcing companies.
"We will see an increased need for outsourcing at healthcare
insurance companies and hospitals to reorganise their operation to
accommodate the reform mandates which are coming," Firstsource
Chief Executive Ananda Mukerji.
The new regulation requires insurers to restructure their
administrative costs to ensure that about 90% of the money is spent
on actual wellness of the individual, Mukerji said.
Firstsource is looking at opportunities to support insurers to
reduce administrative costs. Studies indicate that insurance
companies spend around 9%-41% of their money on administrative
services, he added.
The company derives about 40% of its total revenue from
healthcare provider services and insurance.
It already has centres in the U.S. that offer services for
insurance claims processing and assessing eligibility for various
health programmes run by the government.
"We expect administrative requirements (for insurance companies)
to increase by early 2011 and reach its full potential by 2014,"
said Sanjiv Kapur, senior vice president and head Patni BPO.
Meanwhile, business process outsourcer WNS is also looking to
expand its healthcare offerings in the U.S. and is opening more
centers in the U.S. and Europe to build relationships with local
governments, Chief Executive Keshav Murugesh said.
The focus will be on setting up centers for "healthcare and
government (businesses) in the first phase," he added.
Insurance accounts for almost a third of WNS's revenue, while
healthcare forms a small part of this, Murugesh said.
Also, there is a proposal to spend around $20 billion on
digitization of medical records, Rohit Anand, an IT analyst with
PINC Securities.
Firstsource expects bulk of the business from the proposed
overhaul of the system to come in 2013-2014, Mukerji said, adding
that the company is already ramping up its operations in the U.S to
address this market.
Cognizant Technology, another major player in the healthcare
services segment, wasn't available for comment immediately, while
Infosys BPO, the unit of Infosys Technologies, declined to comment,
citing to a silent period ahead of quarterly results due in
April.
-By Dhanya Ann Thoppil, Dow Jones Newswires; +91-9886929464;
dhanya.thoppil@dowjones.com (Shikhar Balwani also contributed to
this article)
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