1. 1 Outsourcing/ Offshoring in Healthcare Presented by Suniti Ponkshe April 2004

2. 2 Today’s Focus Outsourcing Off-shoring Offshore Transcription Services Other Outsourcing in healthcare Issues to remember

3. 3 What is outsourcing & offshoring? Outsourcing --- is the transfer of ownership of a process to a supplier. Essence of Outsourcing --- taking important business functions that don’t differentiate your business and extracting value while minimizing your investment of time, money and talent. Offshoring --- is transfer of internal business process or technology processing to an external provider outside U S A Essence of Offshoring --- migrating business processes or technology processes overseas to lower costs without significantly sacrificing quality; countries such as India, the Philippines, Ireland, China and emerging in Russia

4. 4 State of the Outsourcing Industry “By 2005 outsourcing will represent 59% of IT services” – Gartner “US technology and business process outsourcing revenues will reach $226 billion by 2006 -- up from $103 billion in 2002” - Forrester Research “By 2007 offshore business process outsourcing services will represent 14% of total BPO market and India’s share will be 57%” – Gartner “As many as 588,000 U.S. white-collar jobs will be offshored – and a total of 1.6 million by 2010. The U.S. had a total of 138.3 million employed workers at the end of February” --- Forrester Research “Behind outsourcing debate: surprisingly few hard numbers” –The Wall Street Journal “The debate about the ethics of offshoring misses the point that it represents the inevitable next generation of business practice” – MIT Sloan Management Review Spring 2004

5. 5 Outsourcing Trends in Health Care  Most of the outsourcing deals have been ……..  Selective Outsourcing for application support  Many of the Total Outsourcing deals have been …..  Completed in the past 5 years  Many have been traditional facilities management models but Few have been other models ………  such as Equity Holdings  Typically, outsourcing models have been conservative ….  They have been designed to address fear of loosing control

6. 6 Offshoring Trends in Health Care and non-Health Care markets  Healthcare has been leveraging offshore market for transcription services for almost 10 years …..  Address staffing shortages and extend the working day  Total market is $20 Billion and $40 million is in India  Other healthcare areas are starting to use offshore market  Radiology readings  Other industries have been leveraging offshore market for many years  Full IT services  Business Processes  Emerging areas: legal research, tax professionals, technical writers

7. 7 Offshoring Trends in Health Care and non-Health Care markets  Other industries have been leveraging offshore market for many years  Full IT services  Business Processes  Emerging areas: legal research, tax professionals, technical writers  Offshore market has come under scrutiny  State of economy --- Jobless recovery  One incidence where patient records privacy was endangered  Fear of offshore market becoming stronger than U S market  According to U.S. Chamber of Commerce “insourcing beats outsourcing by nearly $60 billion annually; by the year 2010 we will not have a shortage of jobs, but rather a shortage of workers ” report released in April 2004

8. 8 Why Outsource or Offshore?  According to the Outsourcing Institute, top three reasons for outsourcing are  Costs  Focus  Resources  Key reasons for offshoring are  Lower costs  Deliver maximum value to customers  Deliver maximum value to shareholders  Today’s Speakers  Outsourcing – how it is working for Adventist  Offshoring – how it did not work for Tumbleweed Corporation  Offshore Transcription – issues related to Medical Records profession