**Figure 1: Health is a sector with strong potential for outsourcing**

<!-- Start of picture text --> 5 60<br>Share of jobs in high income countries that<br>could be outsourced (right hand scale)<br>50<br>4<br>Aggregate number of jobs that could<br>be outsourced (left hand scale)<br>40<br>3<br>30<br>2<br>20<br>1<br>10<br>0 0<br>Packaged IT services Banking Insurance Pharma Auto Health care Retail<br>software<br>Millions of jobs<br>Per cent of high income country jobs<br><!-- End of picture text -->

**Source:** McKinsey Global Institute (2005).

## **Case Study n°4:**

## **Exports of Off-shore Medical Transcription Services – The Case of the Philippines**

The Philippines have benefited from the first wave of off-shoring of medical transcription services (i.e. the process of interpreting/encoding electronically the oral dictation of health professionals regarding patient assessment, therapeutic procedures, diagnosis, and so forth). The first large medical transcription company (Outsource Transcription Philippines Inc.) started in the late 1990’s, and benefited from a rapid expansion of medical transcription needs in the US due to changes in health insurance accountancy requirements (1996 Health Insurance Portability and Accountancy Act). The demand for outsourced medical transcription services in the US is growing at 20 percent per year, coupled with a 10 percent decline in the number of transcriptionists in the US each year. The US therefore remains the main driver of trade in this field.

The Philippines comparative advantage in this area is mainly explained by its pool of English-speaking workers (third largest English speaking nation in the world with a 94 percent literacy rate). Transcriptionists are usually medical school college graduates who work part time while preparing for the Philippines’ Board exams. The country also has a strategic location, with 12 hour time difference with the US. In addition, the government provides strong incentives for foreign investment in the sector, and supported the industry by implementing key regulations (e.g. on e-commerce and data protection) and developing the IT infrastructure.

As a result, medical transcription outsourcing has grown at a 130 percent rate between 2001 and 2004 – by far the fastest growing outsourcing sector in the country. The majority of the 25 companies exporting these services in 2004 were owned by US investors, and should benefit from an acceleration of the outsourcing phenomenon. In 2004, USD 13 billion were spent on medical transcription in the US, with only USD 2.3 billion on outsourcing. In absolute value, Philippines’ exports still represent less than 1 percent of the market, and the growth potential remains substantial. Recent projections suggest that the Philippines will continue to be among the largest markets for medical transcription outsourcing over the next 5-7 years, and could contribute to filling the 47 percent supply gap in the US transcription market.

**Source:** Blouin et al. (2007); Arunanundchai and Fink (2007).

# <u>Mode 2</u>

As suggested above, estimates of the number of patients traveling to seek care abroad significantly vary from one source to another. According to some WHO official, this number could reach 4 million patients a year, with over one million for Thailand alone (India, Singapore

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