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Under-penetrated opportunities: Building scalable service offerings

Presented by: Divya Sehgal, COO, AHS

Date: 10th June 2009


Agenda

US Healthcare – a large market, significant needs

Landscape of Global Sourcing

Roadmap : Six Point Prosperity Kit


Healthcare delivery in US lags despite highest per capita expenditure

Year 2007

US healthcare is $2.2 trillion

($450 bn excess)

45 million uninsuredin US

$7421 per capita expense


US Healthcare: Higher Admin Costs than Other Industries

906 MM Officevisits

83 MMOutpatient

Visits

44 MMInpatient

Visits

$ 380 Bin admin costs

Source: National Center for Health Statistics.

% of $ Spent on Administration

of Claims

$0.02

$0.03

$0.05

$0.25

Hotel

Retail

Airlines

Healthcare

Administrative Cost of Hospital

and Physician Care

Medical care , 66%

Insurer BIR, 11%

Care setting BIR, 10%

AdministrativeNon BIR, 13%


HC IT Policy CommitteeHC IT Standards Committee

Privacy and Data security

*ARRA : American Recovery and Reinvestment Act of 2009

Recent Policy Response by President Obama’s Administration

Health Information Exchanges

Goal: Support Information SharingFunding: $ 300 million from ONC for regional grantsRelated provisions National institute of Standards and Technology (NIST) will award grants to universities and other research groups to create Centers for Healthcare Information Enterprise Integration to develop new approaches for fully interoperable national healthcare infrastructure.

Office of the National Coordinator (ONC)

Goal: To develop HIT infrastructure to improve quality, reduce costs and protect privacy. Funding: $28 billionRelated provisions - Codifies ONC (operating plan due May 18th, 20090 - Establishes Chief Privacy officer - Issues grants to promote interoperability , test standards, fund HIT regional extension centers.

Electronic Health Records

Goal: 90% EHR adoption for physicians, 70% for hospitalsFunding: 17.2 billion for CMS incentives Related provisions - National HIT Research center - Hit Regional extension centres to provide HIT training and technical assistance to providers. - Meaningful use of certified EHRs.

Comparative Effectiveness Research

Goal: Support research to reduce inappropriate and unnecessary care (would not be used by government to mandate use of clinical guidelines, for payment, coverage of treatment)Funding: $ 1 BillionRelated provisions 15 member Coordinating Council for Comparative Effectiveness Research.


Agenda





Healthcare: Upto 8% Jobs are Globally Resourceable

• Over 70% of the work requires patient contact, and a further 13% requires presence in medical facilities

• Primary opportunities are Billing, G&A and some IT services

• Total opportunity is close to 1 million FTEs

Maximum global resourcing Potential %

50

25

0

0 25 50

Other ProfessionalHealth care services

Patient care provision

• IT Services

• Billing, G & A

Nursing servicesHotel functions

8% OF HEALTHCARE JOBS ARE GLOBALLY RESOURCEABLETRANSLATING INTO AROUND 1.0 MILLION FTES BY 2010

Share of employment %

Source: Interviews: McKinsey Global institute analysis.



1995 2000 2008

Medical Transcription

Parts of Revenue

Cycle

End-to-EndRevenue

CycleProcesses

VendorsIndividual

EntrepreneursEntry of Larger

Organizations

Maturity of vendors

and technology

Customers SmallBilling Cos

LargerBilling Cos

LargeProvider

Organizations


Then and Now -- About Global Sourcing Then and Now -- About Global Sourcing

How can we expect

offshore staff to understand US Healthcare

We are veryhappy with the quality of staff, their ability to

learn and deliver

Our vendor commitment to information

confidentiality is second to none. We feel they are our extended

business office.

Will the vendor be able to understand

and manage complex

processes

Delivered quality and cost has exceeded our expectations

Then Now

Can thevendor be trusted with confidential

information


Lessons from the field

1. The US healthcare industry ($2.2 trillion) is one of the largest technology & services market and the new administration’s focus too is technology enabled Quality and Affordability.

1. The US healthcare industry ($2.2 trillion) is one of the largest technology & services market and the new administration’s focus too is technology enabled Quality and Affordability.

4. Large part of US healthcare such as - the provider side - operate in the ‘Not for Profit’ mindset.

4. Large part of US healthcare such as - the provider side - operate in the ‘Not for Profit’ mindset.

2. Compared to other traditional markets ( BFSI, Retail, Manufacturing etc) for Indian IT/ITeS companies , Healthcare is vastly untapped. Case Example: AHS

2. Compared to other traditional markets ( BFSI, Retail, Manufacturing etc) for Indian IT/ITeS companies , Healthcare is vastly untapped. Case Example: AHS

3. US healthcare is huge but still very local, “close to the heart of the local community”. Business accentuating biased opinions against “offshoring”. Even large national organizations like ‘payers’ are not very global in their reach or markets.

3. US healthcare is huge but still very local, “close to the heart of the local community”. Business accentuating biased opinions against “offshoring”. Even large national organizations like ‘payers’ are not very global in their reach or markets.

7. There has traditionally been a lack of mature global vendors in this space. Many companies are now bridging the gap and establishing viable paths. Case Example: AHS

7. There has traditionally been a lack of mature global vendors in this space. Many companies are now bridging the gap and establishing viable paths. Case Example: AHS

5. Appropriate domain knowledge & data confidentiality (under HIPAA) are very important requirements for clients.

5. Appropriate domain knowledge & data confidentiality (under HIPAA) are very important requirements for clients.

6. Highly regulated market, dependent on funds from federal/state/community/ charity sources which makes “offshoring” politically incorrect

6. Highly regulated market, dependent on funds from federal/state/community/ charity sources which makes “offshoring” politically incorrect


Agenda





5. Explore success based pricing

4. Be flexible

3. Translate domain to performance

2. Offer end to end integrated solutions

1. Domain is the key

6. Building trust is critical

Six Point Prosperity Kit


1. Domain is the Key

• Invest pro-actively to build competency centers around key value

drivers

– Example: Medical Coding

• Training is critical

– Domain has to be transferable & scalable

• Knowledge management & institutionalization of skills is needed

– Dependence on individuals to be reduced

• Retention of key staff

– Shortage of knowledge professionals is acute“You understand the industry better than we expected. Most other entities only understand the processes they execute” --- Customer Speak


2. Offer end to end Integrated Solutions

• Offer Integrated BPO, IT & Consulting services.

• Offer services across the value chain

• Offer solutions, not just services


3. Translate Domain to Performance

• Deliver superior performance– Higher collections

• “Word of mouth” is the best sales tool– Single industry players are heavily dependent on customer-

speak

• Drive efficiencies & economies of scale & push the benefit thru to customers– Provider-side example

• Translate into higher margin & greater capital turns



4. Be flexible

Varying engagement models can be tried out

Staffing models to be flexible Ability to handle small or large projects

3. Translate domain to performance

2. Offer end to end integrated solutions


6. Building trust is critical Minimize risk Set the agenda Localize the sales force

Varying pricing models can be tried out

Six Point Prosperity KitSix Point Prosperity Kit



4. Be flexible

Varying engagement models can be tried out

Staffing models to be flexible Ability to take small or large projects

3. Translate domain to performance Shorten transition time Ensure SLA performance is superior “Word of mouth” is the best sales tool Drive efficiencies Translate into higher margin & greater

capital turns

2. Offer end to end integrated solutions Offer Integrated BPO, IT & Consulting

services. Offer services across the value chain Offer not just services but a total solution


Invest proactively to build domain Training is critical Knowledge Management is important Retaining staff

6. Building trust is critical Minimize risk Set the agenda Localize the sales force

Varying pricing models can be tried out

Six Point Prosperity KitSix Point Prosperity Kit


Apollo Health Street – Credentials

• Key investors include One Equity Partners, Temasek and SVG.

• Leading provider of revenue cycle management solutions to the healthcare industry.

• Provider clients include 3 top academic health systems, 40 hospitals and others.

• Comprehensive suite of platform enabled back-office services spanning hospital revenue cycle workflow from patient admission, charge capture, claims processing and receivables management.

• Payer clients include 3 of the top 5 commercial payers.

• IT clients include 2 of top 5 PMS companies, 2 of the top 10 EMR companies.

• Rated No.1 Healthcare BPO in 2008 by the Black Book of Outsourcing.

• Rated No 37 in the Healthcare Informatics Top 100 companies list



Thank You

Divya Sehgal, Chief Operating OfficerApollo Health Street

email: [email protected]

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