Strategic CIO // IT Strategy
Commentary
7/25/2006
08:10 AM
Paul McDougall
Paul McDougall
Commentary
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More Penny-Pinching HMOs Outsource Americans' Private Medical Data To India

If you've had some nasty or embarrassing illness in the past 12 months, perhaps an ailment so unusual or damning you'd prefer to hide it from your employer, friends, and loved ones, then here's a shocker: There's a good chance a stranger in far-off India knows all about it. And the kicker: It was your health care provider that told him of your secret battle with plantar warts, rampant hirsutism, and pathological addiction to eBay.

If you've had some nasty or embarrassing illness in the past 12 months, perhaps an ailment so unusual or damning you'd prefer to hide it from your employer, friends, and loved ones, then here's a shocker: There's a good chance a stranger in far-off India knows all about it. And the kicker: It was your health care provider that told him of your secret battle with plantar warts, rampant hirsutism, and pathological addiction to eBay.Like most other parts of corporate America, the health care industry is quickly learning that there are enormous savings to be had through offshore outsourcing. At an increasing rate, insurance companies, hospitals, and pharmaceutical manufacturers are farming out to cheap-labor countries everything from claims processing to diagnostics to drug testing. Total spending on offshore outsourcing by the U.S. health care industry will grow from $321.7 million in 2005 to an expected $575.3 million in 2008, according to IDC.

Along with that work is going gigabytes of private patient data--information so sensitive that it could be used to deny someone a job or make them ineligible for life insurance. There's a widely held myth that federal regulations like HIPAA prevent that sort of data from going abroad. That's not the case. As long as the foreign processing company adheres to U.S. rules concerning privacy and security, it's permitted.

So should we demand that our congressmen outlaw the offshoring of medical data? Consider this first: Is it any worse to have a nosy claims processor in Delhi gossiping about your medical history than one in, say, Hartford--the latter being a person who's more likely to actually know someone you know? To boot, many Indian business and tech services firms maintain tighter security procedures than some of their U.S. counterparts. They know that one major privacy breach could sink them.

Finally, offshoring to low-cost countries like India offers a potential salve to the growing crisis in this country around medical expenses. Costs are skyrocketing and many employers--GM, for example--are cutting staff in part because they can no longer afford all those insurance premiums. One thing is for certain: The United States must find ways to curb the skyrocketing cost of health care. Offshore outsourcing is at least worth a long look as part of the solution. Or does the whole thing just make you too uncomfortable?

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