Part - I

Probably one of the most humiliating moments of my career was having to sit in a meeting with other managers and the owner of the transcription service I was working for and have key people from the large hospital account we were about to lose gleefully tell us we were the �Wal-Mart of medical transcription services.�

In its class, Wal-Mart is a great store and an American success story. But it isn�t Nordstroms, just as McDonald�s isn�t Delmonico�s, coach isn�t first class, and Motel 6 isn�t the Marriott. These companies are branded to a market segment that is willing to sacrifice quality and service in order to obtain a better price. They were structured to capture that market segment and they have done very well servicing it.

But is there such a market segment within the healthcare industry? And what business would be proud to proclaim, �We�re the Wal-Mart of the medical transcription industry?�

The healthcare industry in the U.S. continues to experience decreasing reimbursement and greater (costly) regulatory demands. National healthcare expenditures in the U.S. will more than double between now and 2011, to $2.8 trillion per year, accounting for 17% of gross domestic product (CMS Office of the Actuary). Analysts predict that one job in five in the U.S. will be in healthcare, due primarily to an aging Baby Boomer population. Medicare reduced physician reimbursement rates on January 1, 2002 by 5.4%, under a formula approved by Congress in 1997. The American Medical Association (AMA) has indicated that 17% of U.S. physicians do not accept Medicare patients, due to low reimbursement and the cost of providing care. In addition, CMS has delayed action on a new regulation to phase out Medicaid upper payment limit, a loophole that, if closed, could cut Medicaid payments to states by $9 billion over five years and have significant impact on public hospitals. MedPAC (Medicare Payment Advisory Commission) criticized the reimbursement formula, which does not account for increases in healthcare costs. The Center for Studying Health System Change said that 2001 data has indicated access problems, such as waiting times for appointments and finding physicians who accept Medicare patients. It becomes obvious that for physicians and hospitals, cost is always an issue. At the same time, however, quality of healthcare delivery is also under fire, and physicians and hospitals are expected to deliver very high quality in spite of budget cuts. According to the Institute of Medicine (IOM), up to 98,000 Americans die each year from preventable medical mistakes they experience during hospitalizations � a figure that does not include harm from mistakes made in the outpatient setting. Although errors and lack of sufficient data are costly, so are the solutions. Computerized physician order entry, electronic medical records and collaborative records address the quality issues, but at a cost. It isn�t surprising, therefore, that the concept of having to choose between quality and price, or price and turnaround, or turnaround and quality, is one that is unacceptable to most healthcare providers.

I was discussing a prospective contract with a business associate and the fact that the pricing would make it necessary to contract the transcription to an overseas company, but wouldn�t allow for a profit and any kind of quality assurance measures, requiring that one be sacrificed. My associate said, �Doctors don�t read this stuff anyway.� Is that what I�m supposed to tell the client if someone does happen to read it and finds errors, or if the errors are so gross that they are evident on cursory review? �I�m sorry, but you aren�t paying enough for us to do a good job,� or perhaps, �Gosh, we didn�t think you�d actually read it.� A CFO who has to oversee finances for a facility that must provide the same (or higher) level of care today at a reimbursement rate that is 10% (or more) less than it was two years ago doesn�t want to hear that what the facility is paying for medical transcription services isn�t enough to get a good job.

Continued�

(To read Part II, click on the �Next� link, below)


Julianne Weight
CEO
AlphaBest LLC