The 2009 US Stimulus Act is implementing changes in the way healthcare providers use electronic healthcare records (EHR). By 2011, eligible providers and professionals will get benefits by implementing EHRs, and those who fail to adopt qualified EHR systems will have their Medicare payments penalized. This is seen as an opportunity by developers and service providers that offer outsourced services, such as software development and records management. However, privacy concerns might come in the way of offshore companies winning contracts from healthcare companies.

Forrester Research (news, site) values the potential market for EHR-related activities from the healthcare IT initiative at US$ 50 billion in the next two years. Outsourcing companies, such as those in India, the Philippines and other nations in Asia and the Pacific with inexpensive labor, are keen on cashing in. Apart from being competitive in terms of labor cost, offshore companies often have capable human resources that can handle software development, customer relations and data management.

The potential is "just like another Y2K opportunity," says Pradep Nair of New Delhi’s HCL Technologies Ltd., referring to the Year 2000 glitch in computers’ internal clocks that resulted in a lot of projects for Indian software development firms. However, offshore comapnies are also facing heavy competition from US-based providers like Dell (news, site) and IBM (news, site).

Concerns With Sending Information and Work Offshore

Among big hurdles that offshore service providers face are the concern about protection of private data, as well as the efficiency of developing EHR systems in a non-US context.

At this time, offshore service providers have long been in contracts with insurance and pharmaceutical companies, which, until now, have been bearing bulk of the cost for electronic patient records. However, hospitals and medical professionals are still not comfortable with the idea of sending patient information overseas. "It is much harder for Indian Suppliers to get these kinds of contracts than their American counterparts," says Nishant Verma of Bangalore-based outsourcing company Tholons, Inc.

Hospitals' concern stems mainly from the potential legal implications of sending sensitive patient information to another country. This includes various complications, such as differences in privacy laws. Once information reaches foreign soil, US jurisdiction might not necessarily apply.

On a more practical note, there is also the efficiency implications of developing EHR systems off-shore. Building information systems "is hard to do off site, let alone offshore," according to Darren Dworkin, CIO at Cedars-Sinai Medical Center in Los Angeles. The hospital is currently completing a four-year electronic medical records system costing US$ 100 million, which involves intimate knowledge of the various terminologies and professional nuances common in hospital settings, which an outside service provider might not easily understand.

Public support and acceptance might also be difficult to achieve, given individual concerns about privacy. Research from the University of North Carolina cites fears of identity theft as an example of a reason behind the reluctance to adopt EHRs. Dr. David Baumer, co-author of the research, suggests stiff penalties for inappropriate disclosure of information. He also cites the case of the European Union, where EHRs have gained wide public acceptance (e.g., 95% of people in Holland have electronic health records).

Division of Labor Might Be the Key

Still, service providers are not discounting the possibility of both US-based and offshore companies collaborating on developing EHR systems for the US market. For instance, Cognizant Technology Solutions Corp. is headquartered in Teaneck, New Jersey, but has a sizable number of its staff in India. Meanwhile, some Indian-based firms like HCL also have a big staffing compliment in the US. There is enough work to go around, and some tasks, like support and quality-control can be outsourced or offshored for lower costs and better efficiency.

Context, security and efficiency are often issues that face projects and activities that involve outsourcing, especially if these will be done offshore. In the case of healthcare records, the concern is amplified, because of the sensitive and private nature of the data. Given this, cost-saving benefits of outsourcing might not necessarily outweigh the risks and disadvantages. What hospitals, doctors and service providers can do is arrive at a scenario in which security can be ensured at a reasonable cost.