The "write" choice: a primer on outsourcing transcription services: deciding whether to outsource transcription services and then, if you do, picking the right vendor are not decisions to be taken lightly. The consequences of a too-hasty decision can affect the entire revenue cycle

Healthcare Financial Management, Feb, 2006 by Bryan F. Smith

Face it, medical transcription is not "sexy." It's definitely not an area that's topmost on the minds of most hospital administrators. But it is a cornerstone of hospital, physician office, and clinical operations, and if the quality of a hospital's medical transcription services declines, it can cost the organization millions of dollars and create dissatisfaction among physicians.

The question hospital financial leaders need to be asking is, "How can we manage medical transcription services in a way that helps us minimize costs and capital expenditures, speed the revenue cycle, and improve physician satisfaction?" For many facilities, the answer may be to outsource transcription services. To determine if this approach is right for your organization, you should consider the following points, which constitute a primer for healthcare executives who are beginning to explore the outsourcing options.

Transcription Services Today

Certainly, hospitals need healthy accounts receivable and positive cash flows. So it is important that the transcription processes be optimized to enable efficient billing. Interviews with a number of hospital administrators from across the country regarding the impact of medical transcriptions on their operations provided some insight into the status quo in the nation's hospitals with respect to this area.

Three findings were particularly noteworthy:

> The administrators typically want to move toward automated processes to expedite the billing process, increase payment, and reduce employment expenses, but they lack confidence that current technology is up to the task.

> Typically, the transcription department reports to the CFO, and even when it reports elsewhere, the finance department is involved in monitoring the transcription services.

> Backlog was the only dashboard indicator being used by all hospitals. Few have calculated the impact of turnaround time on the revenue cycle.

Other concerns mentioned by the administrators were problems integrating with existing IT systems, physician satisfaction, and transcription quality.

The Transcription Marketplace

By some accounts, there are nearly 2,000 medical transcription companies in the United States, ranging widely in size and composition. Some are small organizations that were developed specifically to serve the needs of the local hospital (usually by former employees), while others are national and international corporations that provide transcription services as just one of many types of service offerings.

Although all have some unique qualities, the larger, better-capitalized companies appear to be in the best position to take advantage of some of the emerging trends.

Improvements in technology also have expanded the marketplace. Through the use of the Internet and digital and telephone dictation, transcriptionists no longer need to be in close proximity to the hospital. As a result, some companies with newer equipment are employing transcription staff overseas to take advantage of both lower labor costs and the time zone differences, which enable these staff to produce reports for U.S. hospitals virtually "overnight."

Quality Measures and Differentiation

Although each transcription company will invariably tout its quality assurance practices and staff expertise, there are no industrywide standards for transcription training or quality review. Therefore, the best way to compare different companies is not on the basis of their various claims, but on the quality of their results, including billing practices as well as actual medical transcriptions.

The sheer number of transcription companies means there is considerable variation in how the companies operate, including how they bill. In fact, a class action lawsuit was filed against one of the nation's largest transcription companies for deliberately misrepresenting its billing procedures in its contracts. Although this case may provide an impetus for the industry eventually to adopt standard billing practices, for now, it is important when evaluating a possible outsource partner to understand the company's billing practices and to verify that the company can provide regular reports detailing what it is charging the hospital.

The quality and accuracy of transcription will affect the rework required by physicians and staff. One method for checking the accuracy of the transcription is to read through a sampling of reports while listening to the original dictation. The standards set by the American Association for Medical Transcription are an overall rate of 98 percent accuracy and a l00 percent avoidance of certain critical errors.

Why Consider Outsourcing?

Medical transcription is an essential part of a sound revenue cycle. Thus, if outsourcing medical transcription places a hospital at risk of losing control over the process, why should the hospital want to do so? Not surprisingly, it is largely a question of economics.

Improved financials. Some hospitals have seen an improvement in the bottom line due to faster throughput of the revenue cycle and the reduced costs that come from outsourcing.