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NILF2012_US Healthcare BPO Opportunities & Strategies for Offshore  Vendors_ John Willmott
NILF2012_US Healthcare BPO Opportunities & Strategies for Offshore  Vendors_ John Willmott
NILF2012_US Healthcare BPO Opportunities & Strategies for Offshore  Vendors_ John Willmott
NILF2012_US Healthcare BPO Opportunities & Strategies for Offshore  Vendors_ John Willmott
NILF2012_US Healthcare BPO Opportunities & Strategies for Offshore  Vendors_ John Willmott
NILF2012_US Healthcare BPO Opportunities & Strategies for Offshore  Vendors_ John Willmott
NILF2012_US Healthcare BPO Opportunities & Strategies for Offshore  Vendors_ John Willmott
NILF2012_US Healthcare BPO Opportunities & Strategies for Offshore  Vendors_ John Willmott
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NILF2012_US Healthcare BPO Opportunities & Strategies for Offshore Vendors_ John Willmott

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  • 1. U.S. Healthcare BPO: Opportunities & Strategies for Offshore Vendors 14th February 2012rob.hughes@nelson-hall.com nirish@technology-holdings.com© 2011 by NelsonHall. NelsonHall Proprietary – Not for distribution without permission 1
  • 2. Major regulatory change in response to unsustainable costs & demographic shifts is driving a fundamental restructuring of the U.S. healthcare system Impact on BPO Requirements of Macro Factors Impact on BPO Requirements of Healthcare Payers Healthcare Providers • Cost of healthcare is • ICD-10 & MLR driving major IT ~$2.5T/year, 17% of GDP • Less adoption of BPO amongst initiatives as plans accelerates (highest globally) providers to date platform consolidation programs • costs growing at average • Implementation of ICD-10 will or adopt BPaaS or SaaS ~7%/year present a significant challenge processing platforms • Aging population with additional and risk to many providers • Fraud, waste & abuse reform 55m people >65 yrs. old by • The U.S. healthcare sector will driving requirement for 2020 face a shortage of ICD-10 payment integrity services • Increasing complexity of certified coders • Outcome-based reimbursement treatment • Evolving reimbursement models driving requirement for • Political drive for universal and declining charges is driving sophisticated provider coverage will add ~30m citizens adoption of comprehensive management services & to healthcare system revenue cycle management analytics (RCM) services Regulation • Significant adoption of EHR as • Increasing requirement for • ICD-10/5010 result of HITECH but challenges eligibility, enrolment & member • ARRA/HITECH remain around achieving stage 2 services to support State • PPACA & 3 ‘meaningful use’ (MU) Exchanges from 2014 This transformation will drive widespread adoption of BPO services throughout the sector for the rest of the decade© 2011 by NelsonHall. NelsonHall Proprietary – Not for distribution without permission 2
  • 3. U.S. Healthcare Payer BPO market will grow at 10% CAAGR to exceed $13.5B by 2015 14 $13,560m Self-funded • Highest BBPO growth rate 980 will be amongst Regional Health Plans in response to: 12 1,290 Other Public – MLR mandate U.S. Healthcare Payer BPO Market Size ($B) 5% – Margin pressures driven Regional by State Health 10 $9,330m 9% 2,280 Health Plans Exchange market – Emerging business 800 models such as ACO 8 16% 910 2,050 Medicare – Potential new entrants such as CO-OP 1,260 7% 6 • Reform will drive a ~10% 1,550 2,990 Medicaid increase in claims volumes within existing state 12% Medicaid contracts 4 1,930 2 3,970 National 8% Health Plans 2,880 CAAGR 0 2011-2015 2011 2015© 2011 by NelsonHall. NelsonHall Proprietary – Not for distribution without permission 3
  • 4. Payer services are expanding beyond administrative functions to encompass wider cost containment activities 14 $13,560m 430 CDSS (21% GAACR) 410 • Fraud, waste & abuse 430 HIE (19% CAAGR) reform and focus on 640 PI (21% CAAGR) cost containment and 12 580 will drive highest growth DM & CM (10% CAAGR) within payment integrity U.S. Healthcare Payer BPO Market Size ($B) 1,210 Wellness (PI), health information exchange (HIE) and 10 200 $9,330m 910 Provider Mgmt. clinical decision support 13% services (CDSS) 200 1,040 Member Mgmt. 300 390 13% 8 740 • Use of multi-shore 12% service delivery will 550 increase amongst 660 commercial healthcare 6 payer with ~60% of back office activities performed offshore by 8,340 Claims 2015 4 7% 6,280 • Claims administration will remain the largest 2 service sector accounting for over 60% CAAGR of the market in 2015 2011-2015 0 2011 2015© 2011 by NelsonHall. NelsonHall Proprietary – Not for distribution without permission 4
  • 5. U.S. Healthcare Provider BPO market will grow at 14% CAAGR to approach $9B by 2015 9 $8,880m • All healthcare providers New segments are seeking 1,150 Business to outsource activities 8 Model that are not directly linked to healthcare U.S. Healthcare Provider BPO Market Size ($B) Financially 980 delivery, particularly 7 Distressed revenue collection 17% 6 • Highest growth in BPO $5,170m 10% adoption will be 3,290 Reform amongst small to mid- 5 sized practices (<50 620 Driven physicians) and small 670 hospital segment driven 4 17% by need to respond to reform timetable 3 1,760 • The New Business Model segment is using 2 BPO as an element 3,460 Core Business within a transformation 13% Focus strategy to become 1 2,120 ACOs CAAGR 2011-2015 0 2011 2015© 2011 by NelsonHall. NelsonHall Proprietary – Not for distribution without permission 5
  • 6. Healthcare provider BPO is moving from predominantly post-intervention services to encompass activities across the entire patient-provider engagement 440 9 $8,880m Support • Pre-intervention 440 Services services (ins. verification, patient 8 scheduling, eligibility) 1,360 Pre-Intervention will see highest growth U.S. Healthcare Provider BPO Market Size ($B) rate driven by need for 7 increasingly integrated 21% & effective revenue collection 6 29% 3,340 210 $5,170m 500 Medical • Implementation of ICD- 5 Coding 10 will drive significant 500 growth in medical 17% coding & will be the 4 largest single service sector 1,810 3 2 3,740 Post-Intervention 2,650 9% 1 CAAGR 2011-2015 0 2011 2015© 2011 by NelsonHall. NelsonHall Proprietary – Not for distribution without permission 6
  • 7. Clarification of the reform agenda has driven a significant increase in M&A transactions across both healthcare payer and provider sectors In payer sector, strong acquisition focus on: Acquisition Focus • Payment integrity and analytics capability Payment – Verisk’s acquisition of Bloodhound Technologies Other Integrity & 21% Analtyics – SCIOinpire’s acquisition of National Audit 31% – Emdeon’s acquisition of EquiClaim • Information exchange & connectivity – OptumInsight’s acquisition of Axolotyl – Aetna’s acquisition of Medcity EHR – Emdeon’s acquisition of eRX 7% – QSI’s acquisition of Sphere Health Systems In provider sector, strong acquisition focus on: RCM Information 20% Exchange • Revenue cycle management capability and scale 21% – The Outsource Group’s acquisition of HCLS, Medstandard,PFMS, Connecticut Credit… Based on analysis of 147 M&A transactions that occurred in the U.S. healthcare sector between July 2008 & June 2011 – InterMedix’s acquisition of Healthware Solutions, FleetEyes, EMSystems, Texas ER Billing… • Analytics capability • Athenahealth acquisition of Anodyne Analtyics • OptumInsight’s acquisition of CareMedic • Verisk’s acquisition of D2Hawkeye© 2011 by NelsonHall. NelsonHall Proprietary – Not for distribution without permission 7
  • 8. Summary of Opportunities for Nasscom Members Within the U.S. Healthcare Sector National Payers • Driven by MLR and increasingly complex reimbursement structures expansion of existing presence in support of claims, provider management & enrolment services • Driven by need for cost containment and population management, increasing need for multi-shore clinical decision support services and offshore analytics • Some opportunity for payment integrity services probably via SaaS delivery model Regional Payers • Driven by increasing competitive pressures, MLR & complex reimbursement structures opportunities around payment integrity services via multi-shore BPaaS model and offshore support of claims, provider management and enrolment services Healthcare Providers • Driven by shortage of certified coders, increased complexity and short timescale significant opportunity for offshore ICD-10 medical coding • Driven by declining reimbursement rates , increasing complexity and need to reduce revenue leakage, opportunity to provide offshore post-intervention RCM services (e.g. claims submission, denial management, P4P identification & enrolment etc.) • Evolving opportunity to provide comprehensive RCM services encompassing pre & post intervention activities supported through multi-shore delivery model© 2011 by NelsonHall. NelsonHall Proprietary – Not for distribution without permission 8

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