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Will Healthcare Reform Create Jobs?

Healthcare payers are scrambling to adapt their business operations to the dramatic changes resulting from the Affordable Care Act (ACA).  Claims processing presents a particular challenge: because existing automated claims processing systems can’t keep up with the rapidly changing environment, many payers are looking to scale back their commitment to technology and instead increase staffing and investments in personnel.

This surging demand for labor could be a significant boon to depressed rural areas. Indeed, onshore “rural sourcing” models located in economically depressed areas are potentially ideal host sites for healthcare claims processing centers. State and local governments are offering significant tax cuts and other incentives for companies to establish operations in economically distressed areas. In some cases, these incentives significantly narrow the gap between sourcing work domestically and offshoring it to India or elsewhere.

In addition, certain functions involved in healthcare claims processing involve discretionary knowledge-based functions that include reviewing flagged claims and recognizing, for example, when a claim is potentially fraudulent or inaccurate.  These functions, moreover, require Third Party Administrator accreditation and involve liability obligations. As such, offshoring such roles is typically not viable either from a staffing or regulatory standpoint.  Domestically based rural centers, on the other hand, could be well-positioned to provide skills needed for these positions.

Established players who could benefit from this trend include Atlanta-based Rural Sourcing, Inc., which has centers in Mobile, Alabama, Augusta, Georgia and Jonesboro, Arkansas.  CEO Monty Hamilton cites four key advantages of rural processing center:

  • Low-cost labor
  • Infrastructure in buildings and high-speed internet access
  • Contextual knowledge of the U.S. healthcare industry
  • Local and state tax incentive programs that offset some of the costs.

“When you also consider the foreign country risks and requirements for third-party accreditation,” Hamilton says, “rural sourcing companies may be the best alternative for compliance and healthcare cost management for ACA.”

ISG sees a significant opportunity both for rural-based providers as well as for economically depressed areas. One key to success will be to provide sufficient managerial oversight; in many cases this will require a concerted commitment to relocate more senior personnel. While the rural sourcing model often excels at delivering talented labor resources, filling on-site management roles can be a challenge.