Worries grow as healthcare firms send jobs overseas

Some healthcare companies are starting to shift clinical services and decision-making on medical care overseas, primarily to India and the Philippines.

By Don Lee for the Los Angeles Times

WASHINGTON — After years of shipping data-processing, accounting and other back-office work abroad, some healthcare companies are starting to shift clinical services and decision-making on medical care overseas, primarily to India and the Philippines.

Some of the jobs being sent abroad include so-called pre-service nursing, where nurses at insurance firms, for example, help assess patient needs and determine treatment methods.

Outsourcing such tasks goes beyond earlier steps by healthcare firms to farm out reading of X-rays and other diagnostic tests to health professionals overseas. Those previous efforts were often done out of necessity, to meet overnight demands, for instance.

But the latest outsourcing, which have contributed to the loss of hundreds of domestic health jobs, is done for financial reasons. And the outsourcing of nursing functions, in particular, may be the most novel — and possibly the most risky — of the jobs being shifted.

At the forefront of the trend is WellPoint Inc., one of the nation’s largest health insurers and owner of Anthem Blue Cross, California’s biggest for-profit medical insurer.

In 2010, WellPoint formed a separate business unit, Radiant Services, aimed at advancing outsourcing and other cost-saving strategies. WellPoint has eliminated hundreds of jobs in the U.S. over the last 18 months as it has moved jobs overseas, a company spokeswoman acknowledged.

The spokeswoman, Kristin Binns, said WellPoint’s shifting of clinical jobs overseas was a small part of the outsourcing and being done through Radiant because it has the technical expertise and can ensure compliance with laws.

Nursing organizations, however, were cautious.

“It’s obviously a very disturbing trend,” said Chuck Idelson, a spokesman for the California Nurses Assn. “There are serious questions if you’re talking about utilization reviews … and making recommendations on procedures.”

Nursing experts said there also may be licensing issues as states generally require certification for those practicing and dispensing health information.

Current and former Radiant executives declined to comment or weren’t available.

It’s not clear how many other U.S. healthcare firms have contracted with Radiant or other outsourcing specialists, but industry experts said companies were increasingly looking at more healthcare tasks that could be outsourced globally as they face greater cost pressures and sweeping changes in how they do business.

Aetna Inc.has an arrangement with EXL Service, a U.S.-based company with operations in Manila, to provide “targeted care-management support,” spokeswoman Cynthia Michener said.

Health Net Inc., which is laying off dozens of information technology and accounting workers whose jobs are being sent to India, said its outsourcing has generally been confined to administrative and IT functions. UnitedHealth Group, the nation’s largest health insurer, didn’t respond to inquiries.

Outsourcing jobs out of the country has become a hot issue in the presidential campaign: President Obama is pounding Republican challenger Mitt Romney for his private equity firm’s involvement with companies that sent jobs abroad.

Although such outsourcing has been going on for years, American manufacturers in recent years have brought some jobs back to the U.S. as labor costs have risen in China and elsewhere.

Some experts argued that sending jobs abroad could help U.S. companies by enabling them to tap global talent and efficiencies, making them more profitable. When U.S. companies are stronger, the thinking goes, it creates more opportunities for American workers. Also, shifting operations to lower-wage countries can help consumers by holding down prices.

Outsourcing jobs to places such as the Philippines can save U.S. healthcare firms 30% in labor costs, according to experts. But the practice remains controversial, especially with the U.S. unemployment rate hovering above 8%.

Patient advocates worry about crucial decisions involving a patient’s care being in the hands of foreign insurance adjusters. Analysts said there was another concern as well: patient privacy.

Even something as straightforward as medical transcription can raise questions, said Uwe Reinhardt, a healthcare economist at Princeton University. Over the last year, Iowa Health System and hospitals in Utah and Washington state have joined other medical centers that have outsourced the transcribing of doctors’ notes and other records.

“Suppose I’m an AIDS patient,” Reinhardt said. “That person in India would know — and [the information] could be valuable to someone…. For the U.S., there’s nothing more personal than healthcare.”

Dr. Kaveh Safavi, head of the North American health practice for Accenture, a major consulting and outsourcing firm that has partnered with WellPoint’s Radiant, said nearly all countries have laws for protecting patient privacy.

And to safeguard patients’ records, he said, healthcare companies store and maintain their records locally.

As for outsourcing services that are more clinical in nature, he said, “People are looking at all the tasks that can safely and responsibly be moved. It’s still an emerging market. We’re still trying to understand the market’s tolerance for it.”

In general, hospitals are moving more slowly than health insurers to send jobs overseas. But with financial pressures intensifying and the uptake of electronic record-keeping accelerating, analysts and industry people see more consolidation and outsourcing ahead.

“When you have people’s medical, billing and other records kept electronically, then it opens it up to establishing a call center virtually anywhere,” said Steve Trossman, a Los Angeles spokesman for the Service Employees International Union, which represents hospital workers. “There is no longer a reason for it to be physically in the same place as the paper records.”

Moreover, the healthcare reform law could prod insurers to move more jobs to cheaper-wage countries. The new law requires companies to spend 80% to 85% of premiums on medical care, limiting the amount available for administrative expenses.

Few have been as aggressive as WellPoint, which made a profit of $2.65 billion last year on revenue of $60.7 billion. WellPoint’s total employment at the end of last year was 37,700, down from 40,500 two years earlier.

In one of its recent efforts, WellPoint laid off pre-service nurses in Colorado and Nevada so the work could be done in Manila, according to a Labor Department filing by a WellPoint human resource manager in Denver. WellPoint spokeswoman Binns said none of the decisions that involve denial of procedures or treatment for patients are made overseas.

Overall, Binns said, fewer than 2.5% of the 37,000 employees, or at most 925 workers, had lost jobs in the last 18 months as a result of work sent overseas. Only about 50 of those positions involved clinical management of care, she said.

WellPoint’s “sourcing strategies have enabled us to make our services more effective, accessible and affordable to our customers, while allowing us to expand our programs and maintain our service levels,” she said.

WellPoint’s offshoring covers a wide range of departments and tasks involving claims, enrollment, billing, post-service clinical claims review, utilization management and pre-service nursing, according to filings made by company managers and state government officials. Both were helping secure federal trade-assistance benefits for WellPoint workers who have lost jobs because of outsourcing or import competition.

Shannon Cunningham of Columbus, Ohio, who processed medical claims for WellPoint, was laid off last month after a colleague went to the Philippines to train people to do her job.

Cunningham, 43, said she received eight weeks of severance pay. She and others working in medical claims earned $30,000 to $40,000 a year with health benefits, she said.

“I know other countries need work,” said Cunningham, a company employee for three years. But “I just felt like it wasn’t fair. We’re having a rough time too.”


  1. Caroline Bridgman-Rees on August 8, 2012 at 12:41 pm

    Keep jobs in the US!!

  2. Steve on August 8, 2012 at 12:43 pm

    I surely miss the days when Doctors made house-calls…

  3. Betty Clouse on August 8, 2012 at 1:14 pm

    This is so disgusting, I find that Obama or Romney ARE WORTHLESS A BEING A PRESIDENT. They both are idiots along with all Congress, senators and representatives they maybe a few good people out of this rotten barrel but they can’t get nothing done. Our so called government and local governmetn is shot to hell and worthless to Americans. They are out to get filty rich and their hidden agendas and do not care one rats ass about Americans,,poor greedy butts. They all could care less if Americans starve to death they are so stupid!!

    • Fiona Mackenzie on August 11, 2012 at 9:38 pm

      Well, Betty, I find your comment to be disgusting AND ignorant. Before you vote, you may want to learn a little bit about the candidates.

  4. J C Court on August 8, 2012 at 1:36 pm

    It would be marvelous indeed if the requirement were put BACK INTO PLACE, which MADE INSURANCE COMPANIES OPERATE AS NON-PROFITS. I remember the time this was the case. We got excellent health care, had numerous great doctors and hospitals functioned properly.

    I’m hoping every citizen truly thinks about their vote in the upcoming election. By taking the House and Senate back big time from the Republicans & keeping the president in office, we may get the country headed once again in the right direction.

    • Fiona Mackenzie on August 11, 2012 at 9:48 pm

      Over 60 years ago, health insurers were, uniquely, granted exemption from anti-trust law. That enables them to fix prices and not to compete like any other industry. In the three years prior to the passage of the health care bill, many of them raised their premiums from 10% to 29% each year. Obamacare is the FIRST successful effort in 60 years to rein in their prices and profits. I guess until now, administrations have been asleep at the wheel or in the pocket of health insurers.

      This year, thanks to the passage of O’care, Blue Cross was required to send me a refund of excess charges. Yes! We may get a little respect from them yet.

  5. Jean W on August 8, 2012 at 4:33 pm

    No surprise that medical insurance companies are at the forefront of putting patients at risk not just medically but regarding privacy issues as well. Profit no matter what the risk is their business model. This is just one more reason we need single payer Medicare for All right now in this country. Get rid of private insurers and costs will come down, care will improve, and access for all will improve dramatically. This in turn will lead to a healthier, happier population, which will drive healthcare expenditure down and productivity in the workplace up.

  6. Mary Ann S on August 9, 2012 at 11:44 am

    They are outsourcing the jobs to lower the administrative costs so that the CEOs can continue to make their obscene salaries.

  7. Dr. Dan on August 9, 2012 at 10:23 pm

    I haven’t been able to get a job for a long time (and that in itself has caused employers to be leery of me). Between this out*****ing (shouldn’t that be declared a swearword?) making the pool of available jobs smaller, and the healthcare boondoggle itself, I probably wouldn’t bother to call 911 if I thought I was having a heart attack.

  8. Kim on August 11, 2012 at 9:35 am

    I love how these companies want to insure americans and take their money, but they don’t want to have to employ americans.

  9. joyce on August 12, 2012 at 10:32 am

    Many US nuring schools have greatly limited their focus on patients and patient needs. The Philipines seems to have continued to stress patients and patient needs. So out sourcing may not be a bad idea for many patients.

  10. Renee on March 8, 2013 at 8:14 pm

    Has anyone noticed that as the price of medical care has risen exponentially for both humans and canines, the quality of medical care has decreased exponentially. Since the doctors’ salaries have increased exponentially from the 1980s onward and their insurance corporations have become for-profit entities with premiums increasing as much as 700% annually from the mid-1990s through April of 2003. Once April 2003 came knocking at the door, premiums rose from about $16,000 to $28,500 (Horizon BCBS of NJ). As the premiums rose, the benefits became smaller. By the way, who do you think started these for-profit healthcare insurance coporations? Who facilitates and enables these private for-profit healthcare insurance companies. It may have to do with the medical schools pushing through students, who should never become doctors. Without these mediocre students, who could not make a match on Match Day, these private insurance corporate entities would have no doctors. These mediocre doctors are totally dependent on the for-profit healthcare insurance industry’s HMO plans. Without these insurance plans,deliberately limiting one’s choice, these mediocre students would be forced to find a different vocation. After all, if we were able to choose our doctors and hospitals, these mediocre students and their small, local, for-profit hospitals would go under in about 6 to 12 months’ time.