Medical Transcription (MT) is the process of converting dictated health records, consultation notes, surgical procedures, etc., into electronic from to generate medical reports that become part of the treatment history of patients.

• The U.S. is presently the biggest market for MT.

• The implementation of its Health and Insurance Portability and Accountability Act (HIPAA) of 1996 encourages the development of a health information system that allows electronic transmission of certain health information.

• With its aging population, more people will need medical care and more medical reports will have to be made.

• Europe, Canada and Australia are other potential markets for the Philippines.

• India is the top offshore provide at present

• Philippine outsourced MT services account for 1% of the global outsourced MT services.

• Most MT companies in the Philippines operate 24 hours, 7 days a week with professional transcriptionists turning out an average of 1,000 lines per day at 98-99 percent accuracy.

Market Opportunity

Market Size

• Global MT outsourcing market – US$18 Billion (in 2010)

• US MT outsourcing market – US$6-7.5 B in 2005 (or about 30% of its initial MT market of US$20-25 B which is growing at the rate of 15%-20% per year)


Presence of a demand-supply gap

• The country has lost opportunities in the past due to lack of capacity of local companies.

• At current installed capacity and average annual growth of 31%, the local industry can only supply about US$153 Million in 2010, which would not exceed 1% of global demand.


Technology that supports the industry

• Expanding technologies on fiber and copper network, wireless technologies (CDMA, GSM, WAP, GPRS, 3G, wireless broadband), radio and VSAT


Support infrastructure

• Digital fiber optic backbone (FOBN)

• Nationwide radio microwave terrestrial network;

• Next generation networks (NGN), characterized by the use of Internet Protocol (IP), Multi-Protocol Label Switching (MPLS) and Wave Division Multiplexing (WDM)

Support Industry

• Presence of Training Institutions for Medical Transcriptionists


Ideal Locations

• Metro Manila, Metro Cebu and the Next Wave Cities

• Around 165 ready-to-occupy IT parks and buildings all over the country designed to fit locator’s specific needs.


Human resources

Availability

• More than 450,000 college-degree graduates in 2007 – 31,400 of which are graduates of Medical Science courses suitable for the MT sector

• Annual growth rate of tertiary level graduates estimated at 3 .8%


Quality

• 3rd largest English-speaking country in the world

• 72% of the population fluent in American English

• English language as the basic communication medium used in business, government and schools

• Highly educated, flexible, productive, loyal, dedicated workforce with excellent work ethics and attention to details

• Strong affinity for western culture


Cost advantage

• Average annual salaries of IT professionals in the Philippines handling various types of IT job functions is one of the most competitive in Asia.

• Cost of bandwidth went down by at least 85% in the last 5 years

Industry Potentials

Growths

Number of industry players

• Started with 9 companies in 2003, increased to 41 in 2008

Investments (in terms of project cost)

• BOI-registered MT projects – Php84.484 Million in 2003 increased to Php228.441 Million in 2009

Installed capacity

• 15-50 seats per company

• 85% are small enterprises

Employment

• 12,500 heads as of December 2008

• Average annual increase in employment generation of 33% for the last five years

• US needs at least 25,000 transcriptionists per year

Revenue

• Average annual increase in revenue of 31% from 2004-2008


Contribution to the economy

Percent to total exports

• MT accounts for 0.04% of total Philippine exports in 2008

• MT accounts for 3.36% of total IT-BPO exports in 2008

Government Support

Enabling laws/policies

• Medium-Term Philippine Development Plan for 2004-2010

-Reduction of connectivity cost

-Development of ICT Human Resource

-Allocation of Php30 million worth of training vouchers for MT

• Executive Order No. 561 dated 19 August 2006 creating the Philippine Cyber Corridor, an ICT belt stretching 600 miles from Baguio City to Zamboanga designed to provide a variety of cyberservices at par with global standards, and support by a $10 Billion high bandwidth fiber backbone digital network.

• 2010 Investment Priorities Plan providing fiscal and non-fiscal incentives to Business Process Outsourcing or voice and non-voice IT enabled services.

• Data Privacy Bill proposed in Congress to ensure protection of personal information in the ICT systems.


Development plans and programs

• Five action plans points for the industry for 2009:

- Skills Enhancement – medical records processing, medical coding, medical billing;

- Standardization;

- Technological and Process Innovations;

- Improvements of Operational Efficiency; and

- Aligned Business Matching Programs

• Aggressive educational campaign on HIPAA and data protection

• Roadmap 2010 aiming to capture 10% of the global off-shoring and outsourcing market share by 2011

Incentives

Fiscal

• 4 to 8 years Income Tax Holiday (ITH);

• Special 5% tax rate on gross income after the lapse of ITH (for IT Park/Eco-zone locators);

• Tax and duty exemption on imported capital equipment (for IT Park/Eco-zone locators); Duty-free importation of capital equipment (for BOI-registered firms under E.O. 258);

• Exemption from 12% input VAT on allowable local purchase of goods and services; e.g., communication charges (for IT Park/Eco-zone locators);

• Additional deduction for labor expense.


Non-fiscals

• Unrestricted use of consigned equipment;

• Exemption from wharfage dues and export tax, duty, import and fees;

• Employment of foreign nationals;

• Special Investors Resident Visa

Costs of Doing Business

Salaries and wages (Average per annum, US$)

• Medical/Data Transcriptionist 3,223 (NCR) 2,976 (Province)

• MIS/Systems Administrator 5,987 (NCR) 4,956 (Province)

• Manager/Department Head 13,331 (NCR) 11,484 (Province)

Rentals, lease, acquisition (average)

• Office space rental Php 500-750/sq.m. (NCR) Php 250/sq.m. (Province)

• PEZA-accredited IT Building lease – US$300/station/month (24/7) including TELCO, back-up power generator, security surveillance system, etc.

• PEZA lot lease – US$0.40/sq.m.