May 14, 2007

MTSOs & Platform Providers Battle for Clients, Control
By Elizabeth S. Roop
For The Record
Vol. 19 No. 10 P. 16

The results of this high-priced tug-of-war have implications for all parties—most notably, the hospitals themselves.

The ongoing consolidation of the $15 billion medical transcription industry has seen leading technology vendors snapping up medical transcription service organizations (MTSOs) to begin offering bundled transcription services to hospital clients. At the same time, larger MTSOs have purchased technology companies to introduce similar services.

Caught in the middle are smaller MTSOs. These groups contend the larger technology companies are requiring that clients who want to outsource their transcription services work only with a certified or preferred service provider, or, in the case of bundled services, work with whatever MTSO the technology provider selects to manage that portion of the service.

As a result, they say, hospitals are losing the right to choose their service providers and control quality and cost. Hospitals will be forced to base MTSO selection on the best fit for the software rather than handpicking the service provider that best suits their individual needs.

“When that happens, who gets the short end of the stick? The hospital,” says Chris Blue, senior vice president of sales and operations for Focus Infomatics, Inc., an MTSO recently acquired by Nuance, Inc.

The technology companies argue that while they do have preferred providers, they only control MTSO selection when their clients purchase bundled services in which the technology and transcription service is covered under one contract. Otherwise, while they recommend hospitals work with a preferred provider, they don’t require it.

Also, they say MTSOs are equally guilty of attempting to lock out competition from the platform providers by offering their own proprietary technology free as part of their outsourcing contracts, a deal that can save a hospital as much as $250,000 to $1 million.

“In the past, technology providers were technology providers. They were arms dealers; they would sell guns to anybody. They really didn’t care who used their technology. They were just out there selling their box,” says Dale Kivi, vice president of business development for Spantel, which offers an application service provider-based transcription solution. “The move to try to require a hospital to use a specific list of vendors is [happening now] because if they don’t lock them in, they may eventually lose that hardware sale because a different service company may come in and give their technology away for free. If the primary advantage that the technology company brings is their sales skill, they really have no competitive advantage. The technology has to win the sale on its own merits, not just the merits of the sales relationship.”

Who Does What
Kivi says he knows companies on both sides of the transcription business placing restrictions on outsourcing options. Spantel, however, is not one of them. The company does not offer bundled services, and while it does make referrals to its MTSO clients when appropriate, it does not require customers to work with them.

“The Spantel model is that we will not own or be owned by a transcription service. We have transcription service clients, and when a hospital or clinic client asks us for a recommendation for a service provider, of course we will introduce them to customers that we have on our platform,” he says. “But all we will do is make the introduction. We do not require that they use any of our MTSO clients.”

eScription, which declined to be interviewed for this article, does provide a list of MTSOs with experience using its EditScript technology on its Web site and encourages customers interested in using outsourced transcription services to call them directly.

Dictaphone Healthcare Solutions, a division of Nuance, offers bundled and unbundled services but does not dictate who a client can work with unless the client purchases transcription services through its iChart Managed Services outsourcing solution.

“We pretty much leave it up to the client to decide. Our firm belief is that the customer makes the decision about what’s best for them. In today’s world, as it has been for many years, there is no such thing as a controlled environment. It’s a multiparty world out there, and we play by those rules,” says Peter Durlach, Nuance senior vice president of healthcare marketing and product strategy. “We have ways to tie things together to give the customer better value and services if they do more with us, but they have total control to do what they want to do. We don’t force them to just utilize our world.”

SoftMed Systems, Inc., now part of 3M Health Information Systems, Inc., has a group of MTSOs that have undergone training on their ChartScript- and ChartScript.com-hosted document creation and management system, as well as a due diligence process. However, it does not require its clients work only with those providers, says Kerry Waltrip, senior vice president.

While there are benefits to working with preferred service providers—they have already been vetted for quality and reliability and are fully trained on the technology—it is not 3M’s place to dictate who a hospital client should use, he says.

“We’ve stayed fairly neutral in the process. We try to meet our customer wherever they are comfortable and let them take advantage of technologies that reduce their cost for transcription, yet use the service provider they desire. For those who want a one-stop shop, we can do that as well,” says Waltrip. “The overall objective is reducing the cost of transcription while shortening the turnaround time. This is the driving force behind the range of options we provide our customers.”

The introduction of bundled services is also found on the MTSO side of the fence, where companies that were once primarily outsourced transcription service providers have added technology to their offering mix.

MedQuist, which also declined to be interviewed for this article, provides both outsourced transcription services and technology platforms.

Spheris provides outsourced transcription through its network of employed transcriptionists, as well as its Clarity technology platform for clinical documentation. While Clarity is available as a technology-only solution, the company does require that clients who outsource their transcription needs to Spheris use its technology “to ensure complete interoperability, maximum quality, and the shortest possible turnaround time,” says Harry Shaw, vice president of marketing.

“Spheris does not limit the options of our clients,” he says. “However, Spheris is unable to guarantee that other MTSOs using different platforms with varying degrees of [medical transcription] capacity will be able to interface effectively with our technology and take full advantage of the functionalities our clients have invested in. We do not want our clients to receive less-than-optimum results from our platform because the technologies and MT resources used by other MTSOs may not be fully compatible.”

Why All the Fuss?
If hospital clients are still free to mix and match technologies, services, and providers, why are some crying foul?

One reason is the growing influence of speech recognition technology in the medical transcription world. To bring down skyrocketing transcription costs and improve quality and turnaround times, more hospitals are turning to speech-enabled solutions and often selecting the technology first, then the transcription service provider. This paves the way for technology companies to move in with bundled services or guide the MTSO selection.

“This is where noncooperation and strangling, we feel, take place by the technology companies. It’s just not a fair shake to the hospitals,” says Blue. “At the end of the day, [speech recognition] is not human being-free. If you don’t have a good MTSO, then I don’t care what speech recognition system you use, it’s going to be a painful, horrible experience.”

Focus Infomatics, which worked on all the major technology platforms prior to its acquisition by Nuance, has since found that opportunities to compete for clients currently working with eScription and SoftMed are harder to come by.

“Most technology companies are like 800-pound gorillas. Most MTSOs are not,” Blue says. “We were a smaller company, too, until Nuance bought us. The impact any MTSO has vs. these giant technology companies is minimal. It’s the influence one entity can put on an HIM department vs. the other. We want a hospital to call our references and make up their own mind, not be force-fed or influenced by the technology companies to any degree at all. And we think all great MTSOs should want the same. Never mind that the hospital should be priority No. 1 in this discussion.”

Blue and others argue the MTSO decision should be based on a range of factors that technology can’t influence, such as quality, and not just price. When technology companies offer transcription as part of a bundled service or control vendor selection, they set the price, and the MTSO must make it work.

As a result, it is often the cheapest rather than the best qualified MTSO that handles a hospital’s transcription services through speech recognition. And while hospitals can voice their concerns to the technology vendor that controls the outsourcing contract and get a nonperforming MTSO replaced, they still have no say in the actual selection process.

“They end up with a revolving door of service providers,” Kivi says. “In some cases, their expectations for a level of quality that comes from the outsourced service provider is lowered because they are switched from one group that’s putting their cheapest people on to another group that’s putting their cheapest people on. The hospital then decides that either they’ve got to bring everything in-house, or they have to lower their expectations of what the quality should be. If they bring it in-house, [the technology company] has still achieved their objective of securing their relationship with the hospital and securing the direct sale of their technology.

“The technology company is a technology company. They cannot manage quality. That has to be done directly by the healthcare provider,” he adds. “The technology company adds no value there and, therefore, I suggest has no purpose there other than a self-serving purpose to protect their own market share. It all comes down to controlling where the healthcare provider dollar is spent. If the service dollars go through the technology company, another service provider is not able to take away the technology sale. The bottom line is that it’s not about controlling quality, it is about controlling the client relationship.”

What Is Best for the Provider?
Providers say that what is best for them is whatever solution or combination of solutions will result in better, faster transcription at a lower cost. That was what drove Boston’s Beth Israel Deaconess Medical Center’s decision to implement eScription.

“I think originally, the technology company played a big role in our MTSO selection because it was so new,” says Lauren Cohen, clinical systems manager at Beth Israel. “But now that it is widespread and many MTSOs have been trained on eScription tools, it is just another factor as with most other dictation systems [that have] their own platforms.”

Ultimately, Beth Israel took a hybrid approach. While the majority of its outpatient work is handled by certified eScription service providers, including Focus Infomatics, Sten-Tel, Inc., and Medical INK, most of its speech recognition inpatient transcription work is done by MedQuist.

“Some departments continue to prefer to use their own transcription service providers, either because they are happy with their status quo or because they are not eligible to use the technology platform,” says Cohen.

Because they have had no trouble finding medical transcription companies trained on the eScription technology platform, the debate is a “nonissue,” she says. “However, if it were to become more difficult to find companies readily available to pick up work, then it could become an issue.”

Making It Work
At the end of the day, both sides say they simply want what is best for the healthcare providers they serve. For MTSOs, that means weighing the pros and cons of aligning with one or more technology vendors, doing it alone, or finding a happy medium.

On the upside, aligning with a technology provider offers a chance to bid on business opportunities that would otherwise be missed. On the downside, while technology can offer obvious benefits, such as productivity gains and efficiencies, the cost savings can sometimes come at the expense of the MTSO’s ability to provide quality service.

Companies “may be devaluing the role of the MTSO by selling a cost benefit to the point where the MTSO ultimately ends up being part of the reason there is a cost savings rather than it being just the technology,” says George Catuogno, president of Sten-Tel. “That can work against the MTSO, and it’s the reason why a lot of MTSOs stay away from these kinds of technology partnerships. They don’t want to offer something that doesn’t bring out a clear understanding of why their service is so valuable and why a client should pay a premium for that service.”

Sten-Tel, which does have its own proprietary technology that it offers to customers as part of its transcription services, is also a preferred provider for several leading technology companies.

Living in both worlds can be challenging, says Catuogno, but it can be done by identifying a niche, finding ways to pursue opportunities that do not directly compete with technology partners, and staying true to the levels of service you know you can provide.

“There are so many niches in this industry that people can survive [in], and they can remain viable as a company long-term if, in fact, they don’t expect to be all things to all people,” he says. “Stay within yourself and respond with your level of ability to service the marketplace.”

— Elizabeth S. Roop is a Tampa, Fla.-based freelance writer specializing in healthcare and HIT.