Prescription for transcription

A decade ago, when Yale GRADuate Raman Kumar launched Cbay, taking sensitive patient data overseas (especially) to India was unheard of; most doctors, clinics and large hospitals relied on inhouse teams for medical transcription.

Wary prospects either shut the door on him or took months to decide on whether to trust transcriptionists in remote Bangalore with sensitive data. In the global transcription market (valued at up to $22 billion, according to various estimates), only $5-7 billion is outsourced, and the rest continues to be done in-house. According to Kumar, the first wave of outsourced and offshored medical transcription was led by large hospitals; large clinical practices and individual doctors only recently started steering work to locations such as India. “Diction and grammar are not the only issues.

Certification is a slow process and Indian transcriptionists can take up to two years to become one-third as efficient as an American,” explains Kumar. For years, companies such as Cbay have had to rely on an army of supervisors (as many as 40-50 for every 100 Indian employees) to make sure there are no medical or grammatical errors in work sent from here.

Now, however, Kumar claims that a couple of key trends are compelling a wider audience to consider offshore medical transcription. For one, there’s an on-going talent crunch in the US, with the total pool shrinking from around 300,000 when Cbay first opened shop to under 100,000 today. Then, a meltdown in the industry four years ago saw up to 1,500 mainly mom-and-pop businesses in the US shut shop and leave the market to four or five large players. Cbay has taken a further step in this consolidation with a $285-million acquisition of Medquist from Philips.

“Medquist has around 5,000 people on shore and access to a large crosssection of customers,” says Kumar. While SAC and Lehman have taken a controlling interest in Cbay (for around $123 million), it has also issued debt to cover the cost of this acquisition. “This is a win-win for both companies,” proclaims Kumar.

“We will use our lower cost base here to enhance Medquist’s profitability.” Before he can do that, he will have to deal with potentially damaging litigation by minority shareholders opposed to the deal.

As Cbay looks to digest this large deal (its revenues at $70 million are much less than Medquist’s $340 million), Kumar is also building a large talent pool for his company and the industry. “We have trained around 10,000 people and employ around 5,000 of them. We need at least 25,000 people in the industry here,” he explains.

—Rahul Sachitanand