The business models

Currently the offshore transcription business has evolved into several business models and can be broadly categorized into the following groups and subgroups:

• Direct Subcontracting from existing Transcription companies
  In this model, the transcription companies in the US establish a direct partnership with one or more offshore companies and use them as an extension of their service. In this scenario, the offshore companies do not deal with the ultimate end user and works under the umbrella of the transcription companies.
• Direct marketing to end users in the US, based on offshore transcription resources
  Several new transcription companies have appeared in the market place led by entrepreneurial immigrants to capitalize on this opportunity. They either have their own transcription facilities or use middlemen in their country of origin to coordinate the distribution and delivery of work. Some of the existing major American players have also adapted this strategy and set-up numerous facilities in countries like India and Philippines.
• The Aggregators or middlemen
  This is perhaps one of the most controversial models that has impacted the offshore transcription business significantly, particularly in India. In this scenario people with a presence, connections and some field experience in the US, market the transcription services and use other middlemen or deal with transcription companies in the foreign country to get the job done. In its worst form it has a long chain of intermediary players – Client / the US transcription companies / the US aggregator / foreign country aggregator / consultants / investors / transcription companies – resulting in a complex profit-sharing and delivery model.

Some of the models may not fit any one of the categories. For example, Netrascribe has a marketing presence in the US and works with both transcription companies and markets directly to small physician groups and individual physician.

Analysis of these models, their pros and cons deserve a separate discussion.

Inexperienced new entrants, competition among these players and their eagerness to penetrate market early have resulted in a shaky start for all the offshore companies and disturbed the often small and conservative small businesses in the local transcription industry. One of the aftermaths has been the reduction in the market value for transcription services to unsustainable level. End users who were pursued to make the switch were also in for a shock when they realized that the new players are not ready to deliver the quality of work they have been accustomed to or have the infrastructure to provide the crucial local support. As it is normal in an industry, when the door opens to new players, confusion prevails and when the dust settles, the true market forces emerge and prove the viability of each business model.

In this early battle there have been several casualties, worst of which has been the “wannabe medical transcriptionists” in the foreign countries, who were lured into this profession with a promise of a bright career. Well, that is a topic for another discussion.

The difference between MT outsourcing and other international trades (Durable goods, IT etc)

As a consumer in the US, it is hard to find a store that does not sell goods manufactured in a foreign country in every category of products. It was Taiwan that came to the rescue when everyone decided to display the US flags everywhere after the 9/11 incident. A delay or discrepancy during a milestone review in a outsourced high cost IT project is often accepted and corrected by assigning additional resources or penalty clauses; the business then continues.

With medical transcription, every document you do is critical not because of its monetary value but because of its context, use and criticality. There is no room for error or way to recover from an error.

To some extent it is like making doughnuts. It has to be made everyday and made fresh. But the similarity stops there (even the per unit margin is higher in the doughnut trade). In medical transcription, when you find a bad report, you cannot throw it away and replace it with a new one. Unlike durable goods or IT outsourcing, there is no single specification or design that can be used to check quality or ensure consistency of the final outcome in MT.

Regulatory compliance such as HIPAA privacy rules, handling of PHI (Protected Health Information) and malpractice insurance liability add complexities that were not present in the other trading and outsourcing models.

The Evolution of offshore transcription companies

Due to the early misconception about medical transcription, the offshore transcription business attracted numerous new entrants who were ill prepared. It was viewed as an opportunity to those who either missed the IT boom or felt that they did not have the deep technical skills to compete in that arena. It appealed to many as a high-margin service industry that required minimum capital investment and technical expertise that could be scaled with the corresponding revenue increase. The job content was misunderstood to be similar to a high-level data entry position and the basic language skills of those with English as the second language was considered adequate for the job. The training, skill levels and the effort to deliver a quality product were underestimated.

Before the industry had time to deal with the problems of offshore transcription and work through the issues, too many players were already competing for work that was not there. Several so-called consultants took advantage of the situation and exploited the ignorance of those who were far removed from the reality. The situation got worse as they began to realize that they have no recourse to recuperate the money invested and in a desperate move to survive, many resorted to measures that further deteriorated the reputation of everyone in the industry. With several companies in the fray, the downward spiral continued until the shakeout completed its cycle. Lowering of the rate, sloppy work, unreliable delivery and total lack of understanding of the industry requirements continue to hurt everyone in the business even today.

Like most beginnings of a new industry, the fittest survived and the industry is beginning to pull itself from the abyss. Those who were determined to stay and make something out of the opportunity are beginning to see their perseverance pay. Many who started with the first MTIA (Medical Transcription Industry Alliance) conference in Las Vegas and had the sustaining power to continue their presence in the subsequent four annual sessions, notice a significant difference in the perception of the offshore transcription vendors. The last conference in Tampa, Florida ended with the International Transcription opportunity session that was attended equally by the vendors and potential customers. The industry is beginning to recognize that the offshore companies offer an opportunity to meet the demands of the industry. By working together everyone can find a viable economic solution.