International Trade in Services.pdf - DSpace at Khazar University

Health without Borders 115
Box 4.4: Case Study: Exports of Offshore Medical Transcription Services,
the Philippines
The Philippines has benefited from the first wave of offshoring of medical transcription
services (that is, the process of interpreting and electronically encoding the oral
dictation of health professionals regarding patient assessment, therapeutic procedures,
diagnosis, and so on). Outsource Transcription Philippines Inc., the first large medical
transcription company, was started in the late 1990s and has benefited from a rapid
expansion of medical transcription needs in the United States because of changes in
the accountancy requirements for health insurance (the 1996 Health Insurance
Portability and Accountability Act). The demand for outsourced medical transcription
services in the United States is growing at 20 percent per year and is coupled with an
annual 10 percent decline in the number of transcriptionists in the United States. The
United States therefore remains the main driver of the trade in this field.
The comparative advantage of the Philippines is mainly explained by its pool of
English-speaking workers. (The Philippines is the third largest English-speaking nation
in the world and has a 94 percent literacy rate.) Transcriptionists are usually
graduates of medical schools who are working part time while preparing for medical
board exams. The country also has a strategic location; there is a 12-hour time
difference with the United States. In addition, the government provides strong
incentives for foreign investment in the sector and has supported the industry by
implementing key regulations (for example, on e-commerce and data protection)
and developing information technology infrastructure.
As a result, the market for outsourced medical transcription services grew at a
130 percent rate between 2001 and 2004, by far the most rapidly growing
outsourcing sector in the country. The majority of the 25 companies exporting these
services in 2004 were owned by U.S. investors and should benefit from an
acceleration of the outsourcing phenomenon. In 2004, US$13 billion was spent on
medical transcription in the United States and only US$2.3 billion on outsourcing. In
absolute value, Philippine 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 five to seven years and could contribute to filling the
47 percent supply gap in the U.S. transcription market.
Sources: Blouin, Drager, and Smith (2007), Arunanondchai and Fink (2007).
transcription services have grown at a rate of over 100 percent annually in
recent years (box 4.4).
Mode 2
Estimates of the number of patients traveling to seek care abroad vary significantly
from one source to another. According to an official of the World Health
Organization, the number could reach 4 million patients a year, with over 1 million
in Thailand alone (India, Malaysia, and Singapore are expected to reach this
level by 2012) and an estimated global market of US$20 billion to US$40 billion
(reaching over US$100 billion by 2012) (Drager and Smith 2009).
But is it all trade In figure 4.4, Ehrbeck, Guevara, and Mango (2008) adopt a
narrow definition of medical travel that excludes expatriates seeking care in their