Apria tests waters overseas

Thursday, March 11, 2010

LAKE FOREST, Calif. -- Apria officials may have little to say about reports that they've begun to ship some billing jobs to India, but the cost-cutting strategy has plenty of other industry types talking. Most wonder: Can it work?

The answer: Yes. No. Maybe.

"I would never in my wildest dreams consider doing that," said Bruce Brothis, president of Allegient Billing & Consulting. "It's not rocket science, but you have to understand our culture. I'd love to see their DSO and cash flow a year after doing this."

On Feb. 9, 2010, Tampa Bay Online reported that Apria planned to cut "as many as 79 jobs in Tampa as it shifts the worked overseas, according to U.S. Department of Labor documents." The documents did not say where Apria planned to outsource the jobs, the news site reported. People who represent themselves as current or past Apria employees, however, have posted numerous comments online about the company consolidating its billing and shipping some jobs to India. Other industry sources reported the same.

Lisa Getson, Apria's executive vce president of government affairs, stated in an email to HME News that the company, to offset Medicare reimbursement cuts, began consolidating its billing centers in April 2009. She did not respond directly to reports that Apria has outsourced some jobs to India. She did, however, state the following:  "On a limited basis, we are also outsourcing certain corporate information technology services and simple patient inquiries."

While it's commonplace for manufacturers to outsource production to Asia, it's uncommon for providers to outsource billing and other back-office duties overseas. In part, that's because most providers lack the resources to do it. Another concern is that offshore workers may not fully grasp U.S. compliance and regulatory requirements, including HIPAA. DME billing is also a specialized niche and requires a fair amount of expertise to do it right, say industry watchers.

Allegro Medical Billing found that out the hard way a few years ago when it outsourced some billing to India for a client, said CEO Ward Cook.

 "They didn't know anything about DME," he said. "Their specialty was medical billing for physicians. It was a total flop."

If it's done right, however, outsourcing jobs to India could cut costs significantly. The company in India that Allegro dealt with charged a flat fee of $9 per hour per employee.

"That's a considerable savings," Cook said. "There were no benefits, no workers comp, no insurance, no vacation time. The people in India are college educated--some were college educated in this country. They speak English, although it is somewhat fractured. It could work."

Industry consultant Wallace Weeks said he's confident Apria has run through the economics of outsourcing, but he still doesn't see it as a windfall. The best chance to save money may be in billing for crutches, canes and other non-reoccurring revenue items.

"We incur the same upfront costs with a walker purchase as with a bed rental, but we might have $1,000 in revenue that comes from the bed and only $130 from a walker," he said. "By taking those items and having the services contracted out, there is an opportunity to get those items more near profitable."