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OM in the News: Hospitals Fear Outsourcing Records to India

November 5, 2010

Whenever I blog on the subject of outsourcing  (see Chapter 2), I find myself using the word “controversial” (as on 10/12/10). And, indeed, this week’s Wall Street Journal article (Nov.2,2010) describes the contentious issue of outsourcing digitizing of hospital medical records to India. Overseas providers, it is commonly feared,  do not have the security and privacy controls that US hospitals require. “As soon as it leaves the confines of the US, its not subject to the same rigorous laws as we are”, says the CIO of a Texas chain of 40 hospitals.

Every company in IT wants to cash in on the lucrative $50 billion US health care market fueled by a federal mandate for hospitals to convert to electronic records by 2017.  Amazingly, only 20% of US hospitals currently have electronic health records. Its a carrot and stick approach, with $6 million grants to an average sized hospital (I wonder where all this money comes from!) and penalties for missing the deadline. Its “like another Y2K opportunity” for software firms, says the head of New Delhi’s HCL Technologies.

So the real question is, who should get the contracts? Its not so simple. HCL has about 2,400 American employees in N.C. Then again, Cognizant Technology Solutions is a US firm in N.J., but has most of its staff in India. Indian tech giants Infosys, Wipro, and  Tata are all lined up with bids. But so are IBM, Xerox, and Dell in the US.

Discussion questions:

1. How do students feel about sending medical records abroad for automation?

2. Can this impact relations with India, which sees this as protectionist? (President Obama visits India in 2 days).

3. Why was Y2K such a boon to the IT industry? (Some of your students may not remember the drama that year).

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