Technology is supposed to make medical transcription obsolete, but like Mark Twain's premature obituary, the demise of the medical transcription industry is greatly exaggerated.
It also is an industry with wounds, however, and many of them are self-inflicted.
For example, the entire medical transcription industry has been tarred by a yearlong--and unresolved--accounting and billing scandal involving its dominant medical transcription service organization, MedQuist of Mount Laurel, N.J., one of the industry's few publicly traded companies.
MedQuist's troubles are linked to, but not caused by, a paucity of industry standards. In the MedQuist case, the shortage is in something as fundamental as a recognized standard billing unit for the work medical transcriptionists, or MTs, perform. It's a problem that has plagued transcription providers and their employers for decades, industry sources say.
On the other hand, the very act of measuring what MTs do, typically by lines of transcribed text, has created the impetus to treat and price their work product as a mere commodity, which exacerbates a growing and seemingly intractable shortfall of MTs entering the profession, even as demand for transcription services rises.
Despite the recent consolidations of some larger medical transcription service companies, transcription remains "a very isolated, fractured cottage industry," according to Peter Preziosi, executive director of the American Association for Medical Transcription, Modesto, Calif., the larger of two major transcription industry trade associations. Most of the AAMT's 9,000 members are transcriptionists as opposed to companies.
Thanks to cheap and readily available Internet technology, nearly any transcriptionist with an entrepreneurial bent and a couple of contracts can go into the business, industry experts say. (Independent contractors already represent a sizable minority of MTs.) The fledgling business owners are aided by information technology vendors who specialize in selling their Web-based technology to small medical transcription service organizations, or MTSOs, on a cost-per-unit basis or no more than a few pennies per line.
MedQuist, which now claims more than 3,000 customers and reported 2002 revenue of $486 million, boasts in its corporate history that it started in the 1970s with one transcriptionist working with a manual typewriter on a card table.
Yet "while the barriers to entry are low, the barriers to success are high," according to David Woodrow, president of the Roswell, Ga.-based healthcare documentation division of SPI Technologies, and a board member of the San Antonio-based Medical Transcription Industry Association, another major industry trade group. Most of MTIA's members are MTSOs or the technology companies that cater to them.
Ferocious competition from startups, some underpricing themselves out of business in a vain effort to establish a customer base, also creates problems for established MTSOs, Woodrow says, who notes that even a great transcriptionist might be only a mediocre business leader. "When these things crash and burn, the customer has a bad taste for outsourcing."
Unfortunately, Woodrow says, customers also walk away from an otherwise negative experience with an acquired taste for low-ball prices. Too many of them are willing to take a second chance on the bargain bid of the next new transcription company.
Throw in a new wave of offshore companies leveraging lower labor costs and the competition gets even tougher. But Woodrow, whose firm sends roughly half of its work to MTs in India and the Philippines and half to U.S. workers, says that at first offshore outsourcing was not prompted by price but by the sheer lack of qualified, willing workers in the U.S. to meet demand.
"The primary reason hospitals in the U.S. began to send work offshore absolutely was not to get a better margin," he says. "It was to get more bodies."
MTIA President Sean Carroll, also chief executive officer of Webmedx, a Pittsburgh-based MTSO, says aside from MedQuist at the top of the heap, privately held Spheris, Franklin, Tenn., is the only other company in the industry with revenue of $200 million or more. "Between $200 million and $10 million (in revenue), you have about 25 companies, with most between $10 million and $25 million."
Carroll ranks his privately held firm in this second tier, along with Atlanta-based Transcend Services, the only other publicly traded MTSO.
"Below that, you could certainly make a case for 2,000 companies being under $10 million, with the vast majority of those being under $2 million," Carroll says. But in the transcription industry, even the smallest MTSOs don't know their place.
"You could have a company that is the largest company in the industry competing with a company a tenth its size competing with a company one-hundredth its size," he says. The largest companies offer scale and stability, while smaller firms offer flexibility and price. "Everyone has something to offer."
And while improvements in communication technology feed the medical transcription industry, the advent of computerized speech recognition and artificial-intelligence programs also stand ready to change or, quite possibly, destroy it. The U.S. Department of Labor, in its Occupational Outlook Handbook, 2004-2005 edition, predicted in the short run that job opportunities for medical transcriptionists will grow at a better-than-average rate of 21% to 35% from 2002 through 2012, "spurred by a growing and aging population" and a "continued need for electronic documentation that can be easily shared among providers, third-party payers, regulators and consumers."
The Labor Department says contracting out work offshore and advancements in speech recognition technologies "are not expected to significantly reduce the need for well-trained medical transcriptionists domestically."
Preziosi says he's already seen entire transcription departments in hospital radiology "wiped out" by implementation of speech recognition systems, but while he and many other industry experts agree that technology will eventually change the industry, the process is likely to be slow in coming.
That leaves the more serious, immediate problem of the labor shortage.
A 2004 industry pay survey by Advance magazine found the average MT's pay for 2004 was $32,847, up 10% from a 2002 survey, but experienced MTs who have tested and earned the AAMT's certified medical transcription designation earned an average of $43,551. According to the AAMT's Preziosi, just 2,700 MTs have the certification. The trade group is developing a second skill certification for entry-level MTs, Preziosi says.
Training to become a competent MT takes a minimum of 12 months of course work and typically not more than 18 months, according to Elaine Olson, executive director of the MTIA. Trainees must have a working knowledge of anatomy, physiology and medical terminology as well as computer and dictation skills to function effectively, she says.
Low pay coupled with the relatively long training period to reach basic competency as an MT have been primary reasons for a dearth of new recruits in the U.S., according to industry sources.
Sandra Fuller, executive vice president and chief operating officer of the American Health Information Management Association, says medical records professionals, which include both her groups' members and transcriptionists, need to prepare for technological change, and that may not be all that bad.
"I'd like to wave a magic wand over everybody and go to a more direct form of entry, if only for the timeliness factor, because there is some delay with dictation," Fuller says, adding it won't happen soon. "We're still out in the five-, 10-, 15-year time frame, not the day after tomorrow, but when you look at what the future might hold, there might be less heads-down production and more medical editing. There might be some dictation as data capture, but there might be other ways of data capture," such as front-end speech recognition or direct entry through structured data systems and pick lists in electronic medical-records system software.
But for an industry as old as it is, medical transcription knows appallingly little about itself. Many healthcare industry groups representing transcription users know even less. (Thomas Edison invented the phonograph in 1877 with the primary idea that it would be used for business dictation and with stenographers replacing physicians as scribes for their own notes sometime at the turn of the 20th century). The American Hospital Association, the Federation of American Hospitals and the Medical Group Management Association all were contacted for this story and asked for data about transcription costs and trends affecting their members. None had any information.
The industry's size is unknown.
"There are a lot of figures that get bounced around out there," Woodrow says. "I would say the transcription market is a $4 billion industry at a minimum. The investment community figures say as high as $8 billion."
Other industry leaders interviewed for this story ran the numbers as high as $20 billion to $25 billion.
The level of offshore outsourcing is also unknown. The AAMT, in a member backgrounder on globalization of healthcare documentation, extrapolated from a 2003 MTIA news release that 4% to 5% of total U.S. transcription is done offshore. But the MTIA, in that news release, conceded its numbers were little more than a guess and "no solid statistics currently exist."
Some industry sources say the movement offshore will grow; others say it has peaked.
"It's pure guesswork as to where the numbers are now," says Judy Hinickle, president of TransCom Corp., the third transcription business she has founded since she started working as a hospital MT in 1976.
"No one has any quantification on anything," Hinickle says. "How many work as independent contractors vs. employees? No one knows. How much is outsourced and how much is done in house? No one knows. The Department of Labor says there are 101,000 (MTs), but there is probably twice that. How are we going to move forward showing quality is more important than quantity if we're in the dark right now?"
When it comes to pricing, it's as if the industry were an open-air market in the Third World.
In 1994, the AAMT in association with other industry sources came up with a standard for measuring a single line of transcription, basically 65 characters, but later, the trade group disavowed its own standard.
"We backed out of that standard in 1998," Preziosi says. "It was used inappropriately throughout the industry."
But to this day, some hospitals send out requests for proposals specifying the AAMT line, Preziosi says. "Today, we should get away from it, because you get what you pay for. And what we've been paying for is production, not quality."
John Avedian, director of health information management at the 557-bed Maine Medical Center, Portland, says some users' lack of integrity in applying the AAMT definition of a line has been the problem, not the metric itself.
"We've used the AAMT line," Avedian says. "It's OK with me. But it is not the industry standard. There is no industry standard. You have all these businesses out there who can define it anyway they want. Some of them define it by byte size--that's the size of the file. It's all over the place. It's a very hard thing to validate."
In 2004, the industry was jolted when MedQuist announced it would not publicly report its financial statements for 2003 and the first quarter of 2004. As a result, its stock was de-listed from the NASDQ exchange that June.
In late July 2004, MedQuist issued the findings of an independent review panel. The panel said that while MedQuist had customer contracts specifying the use of the AAMT line, it used its own "ratios and formulas" to determine the number of lines billed "rather than counting the number of characters to determine a billable line as provided for in the contracts." MedQuist's use of ratios and formulas "was generally not disclosed to the clients," and those ratios and formulas for certain clients were changed, again, without disclosure, "in order to affect profit margins," the company reported.
In November 2004, MedQuist announced that its financial statements for 2002 and 2003 were unreliable.
In January, MedQuist, which is majority-owned by Dutch electronics giant Royal Philips Electronics NV, disclosed it had been served a subpoena by the U.S. attorney's office in Boston looking for records regarding its transcription services sold to government and private-sector companies. A probe by the Securities and Exchange Commission also is under way, as are a spate of class-action lawsuits filed by stockholders, hospitals and transcriptionists.
In March, former Siemens Medical Solutions Health Systems executive Frank Lavelle was named company president. Lavelle says he still "can't forecast" when MedQuist will resume the timely filing of its financials.
Lavelle says upwards of 1,200 transcriptionists working for MedQuist use its back-end speech recognition system; another 8,500 do not, but he expects use of the technology will continue to rise.
Terry Cameron, MedQuist's senior vice president of marketing and business development, says a "very, very small percentage" of the company's business is sent offshore to serve customers who need "at least a 10% reduction" in costs as a threshold to consider switching.
"I think it will be continuing to grow in that the labor shortage dictates it," Cameron says. "Is it something that institutions believe is long-term? I think the jury is still out."
While offshoring medical transcription work may have been a solution to the MT shortage in the past, the future of the strategy is in doubt.
In October 2003, a female MT in Pakistan fired off an e-mail heard round the healthcare industry.
The woman, identified as Lubna Baloch of Karachi and interviewed by a San Francisco Chronicle reporter, threatened to post on the Internet the medical records of patients at the University of California-San Francisco Medical Center if she wasn't paid for outsourced transcription work she'd performed. According to the story by Chronicle reporter David Lazarus, UCSF outsourced the work to a California MTSO, which subcontracted some of it to a woman in Florida, who may or may not have outsourced it again to a man in Texas. Baloch told UCSF officials in her e-mail that the Texas man had hired her and stiffed her on a payment but it was the woman in Florida who had wired Baloch money periodically for Baloch's earlier work and eventually made good on the debt.
Citing the UCSF privacy flap, California state Sen. Liz Figueroa proposed legislation that would have made organizations outside the state subject to civil action in California courts for violating the state's privacy law. The bill passed the state General Assembly but was vetoed by Gov. Arnold Schwarzenegger. Seven other states have tinkered with legislation to address sending medical transcription offshore, according to the National Conference of State Legislatures.
In a sense, the San Francisco incident was a mixed blessing, the AAMT's Preziosi says.
"It was a terrible, egregious thing to happen, but it brought light to this industry," Preziosi says. The AAMT, the MTIA and AHIMA issued a joint statement opposing legislation to prohibit offshore work, citing the potential for documentation, billing and even accreditation problems a ban would create, given the domestic labor shortage for MTs. The AAMT does not oppose speech recognition technology, either, Preziosi says.
It was the shortage of transcriptionists that led John Avedian to look to technology, instead of offshore, to ease the strain at Maine Medical Center six years ago. At the time, the hospital was doing 60% of its transcription work in-house and outsourcing 40%. Eclipsys Corp., which provides other information technology products to the hospital, co-markets a system called KBT, or knowledge-based transcription, a computerized dictation and transcription service developed by eScription of Needham, Mass. KBT employs a speech recognition engine used by transcriptionists "on the back end." The alternative is a so-called "front-end" system in which the clinician reviews and edits the text transcribed by the software as he or she speaks.
Avedian says Maine Medical piloted the system in 2001 and began seeing results in 2002. "We started working with eScription, hoping for about a 20% productivity gain," he says. "We're now at about 100%. It was around 170 lines an hour; now we're up into the 340s, 350s or 360s.
"The way the system works, it gets more and more productive as the transcriptionists make changes and they flow back to the model, so the next time, that edit is learned," Avedian says. "Physicians that have been on for years, they barely have to edit them. It's punctuation and formatting, very little changes. That's why we continue to see productivity gains."
Maine Medical moved back to handling 80% of its transcription work in-house by hospital employees at a savings of $1 million since implementing the system, Avedian says. "I've been in the business for over 20 years and this technology is just the biggest no-brainer. There isn't a reason why you shouldn't be using speech recognition in your transcription."
But as high as he is on the technology, Avedian doesn't foresee a day when the transcription service will be eliminated by front-end speech recognition systems.
"I believe this institution would not support having the physician do their own self-editing," he says. "Our physicians are so busy they want and need the service. The analogy I use with physicians is they certainly can iron their own shirts but their time is too valuable, so they send them out to be done. Most physicians need and want the service. There is a value to electronic documentation and there is a point where they need a transcription service for them. They don't want a system to add more time to the documentation process, because if you add more time, they're going to revolt."
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