Wednesday, July 05, 2006

Missing opportunities in outsourcing

The Philippine Star

PALO ALTO, California – Got to the heart of Silicon Valley over the last weekend. On my way home now, I am visiting my son who is working for one of the largest makers of video games near here. A classmate from UP Prep, I had not seen in years, took me on a tour of this city. He pointed out the many high tech operations here, at the heart of which is Stanford University and its very wide expanse of real estate.

I am told that just about the most respected Filipino in Silicon Valley’s high tech community is Dado Banatao, a native of Cagayan province who has done extremely well here but has remained low key. There are other kababayans here too who are taking advantage of the outsourcing boom, marketing such services as medical transcription, medical billing and other forms of business processes outsourcing for Manila-based operations.

Our government has made a big deal about how these outsourced services would spur the economy and cut unemployment. But I am told here that unless we get really organized and do our homework well, it is entirely possible that this may yet turn out to be another missed opportunity. Our problem is, we talk a lot about profiting from the outsourcing boom but have done little by way of organizing our efforts in marketing and other basic things that would carry us through.

For instance, I found out here that in the case of medical transcription, there are very serious problems that could make it more difficult to even keep existing clients. For one thing, as in the case of call centers, there is simply a dearth of qualified manpower. One of the pioneers in the business told me they had to give up a couple of major accounts because they can’t get enough manpower to do the work.

True, there are now training centers back home that offer courses in medical transcription, but they are unable to produce enough people to support even the level of business we now have. And because there is now some degree of cut throat competition too, as more local entrepreneurs get into the business, the churn rate for the trained manpower has become rather high due to piracy of personnel.

The margins have also become razor thin. And the demands of the business are high. A 98 percent accuracy is expected within a turn around period of 24 hours or less. Other than the stiff competition among Pinoys in the business, there is also the competition with other countries like India and Pakistan, among others.

Subcontracting in the business is also one factor that cuts profits to the bone and poses serious operational problems that threaten the industry’s survival. I remember a celebrated case here when someone from Rawalpindi threatened to publish the cases assigned to him, a violation of the medical secrecy law, unless he was paid for the work already done. It turned out that this person was a subcontractor and the threat was serious enough to merit a proposal to be filed in the California legislature to ban the foreign outsourcing of medical records. This could result in a rush of similar proposals in other states or even in Congress, effectively killing the business for foreign entities like those now in this business back home.

Secrecy of medical records is a big deal here. It would certainly help if our own Congress would pass a law that would also declare it a criminal offense to violate the secrecy of the foreign medical records entrusted to our medical transcription companies and require those in the business to guarantee that under pain of substantial fines and imprisonment. While that may not stop a foreign ban here, passing such a law would provide a level of confidence that we can point out, to keep the business.

Of course the most basic thing we should do to keep and even expand our market share of the medical transcription business is to vastly improve the quality of our educational system. Those in the business told me facility with the English language is the most basic problem they face in recruitment, even before facility with medical terminology and concepts is taken into account. This is the one big problem that would make us miss the boat, so to speak.

Actually, I am told that language facility is also the biggest problem of Filipino nurses. This shows up in the examinations they are given before they can practice here. The tests are multiple choices, and all the choices enumerated are correct and choosing the "most correct" answer requires mastery of the nuances of the language.

Back to medical transcription, I am also told that it would also help if our trade attaches could help in high level marketing. Connections to top decision makers in prospective client firms are important in delivering results. A marketing program worked out with the private sector should be more efficient in delivering results rather than the divided approach we now have. A system of assigning overloads to other Filipinos in the business could also be devised to help protect the market share and quality reputation of the Filipino brand.

Anyway, if we are serious about this business, it is time to get organized. Right now, it seems to be going the way of the hot pan de sal phenomenon. Everyone and his uncle are getting into it, even making it a cottage industry of sorts. Nothing wrong with that, except that the way the business is handled now exposes everyone in it to one serious failure, something along the lines of the Rawalpindi experience, and that could result in our losing out on this outsourcing opportunity for good.

Sayang naman. Medical education
I got another letter reacting to previous column items on medical education back home. This time, it is from someone who identified himself as a student of my late father at the UST College of Medicine. He wrote that one reason there is a deterioration in the quality of medical education is the increased attention being given to profit generation.

According to the letter writer, he is worried about the future of the college because of recent developments. It seems that the Dominican priests running the university decided to form a new corporation that took over the ownership and operations of the UST Hospital. In other words, the UST College of Medicine has lost its teaching hospital. If this is true, that is a violation of the law requiring a medical school to have its own teaching hospital.

That sounds strange to me. UST has two hospitals on campus, the charity hospital and the pay hospital, neither of which is attached to the medical school. I realize that the lack of hospital beds to take care of Metro Manila’s needs makes running a hospital a money spinner. But an educational institution like UST should have higher motives than purely monetary.

I have to get to the bottom of this story when I get back. Because my Dad spent most of his professional life at the UST College of Medicine, I am always interested in its reputation as a respected institution for training our doctors. I know my Dad has always complained about how money sometimes got in the way of doing the right thing there, but if this new report is true, this will have to be a new low. That would also be rather sad.
Reason why Reader Lai Chatlani sent this contribution for today.

A Sunday school teacher asked the children why it is necessary for everyone to be quiet during church services.

A bright little girl from the back of the room raised her hand and replied: because people are sleeping.

Boo Chanco’s e-mail address is

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