Publication: SAM Advanced Management Journal
Publication Date: 01-JAN-07
Delivery: Immediate Online Access
Author: Stack, Martin ; Gartland, Myles ; Keane, Timothy
Article Excerpt
With all the media attention to the transfer of manufacturing jobs overseas, it may come as a surprise that international trade in services has grown faster than in merchandising over the past 20 years. And while it may be true that, "You can't go overseas to see a doctor or nurse or get physical care," many healthcare services are, in fact, being outsourced offshore. Diagnostic radiology, a fast-growing and increasingly expensive branch of medicine, lends itself surprisingly well to an offshore approach. U.S. regulations and licensing requirements pose challenges, but successful medical services companies in India, for example, have found solutions. Given the pressing to reign in healthcare costs, more offshore outsourcing seems likely in this sector.
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"The difference between making shoes and radiology is the huge difference in the entry barriers. The entry barrier to starting a shoe factory in Bangladesh is a question of getting through red tape. But the U.S., for example, has high entry barriers for radiology" (Dr. Bhavin Jankharia, quoted in Lowers, 2003). "In 2004, radiologists' starting compensation averaged $350,979" (Volkin and Dargan, 2005).
Since the 1950s, international trade has grown faster than world output, a development that has generated much discussion regarding how falling trade barriers and improvements in communication and transportation technology have facilitated increased foreign direct investment and merchandise trade. Yet, for the past 20 years, international trade in services has grown faster than merchandise trade. One factor contributing to the internationalization of services is offshoring. Advances in communications have enabled a wide range of services to be transferred between countries, while improvements in a number of industry-specific technologies have increased the scope of work that can be digitized and transmitted anywhere in the world there is a reliable broadband connection. While healthcare is not often associated with international trade, a combination of regulatory and technological developments are quickly globalizing elements of this traditionally national market. (1) To more fully understand how markets such as healthcare are responding to these opportunities and challenges, this paper examines the case of radiology. It begins with a brief overview of the history of radiology and then discusses why radiology is a potential candidate for offshoring. The third section examines some of the issues that healthcare entities should address as they weigh the advantages and disadvantages of offshoring a service such as radiology. The last section discusses lessons the offshoring of radiology holds for the healthcare market.
What is Radiology?
Radiology is the branch of medicine that uses imaging technologies to diagnose and treat an array of conditions. Its origin was Wilfred Roentgen's discovery of x-rays in 1895. Over the next several decades, an array of scientists and physicians refined and improved the science and medical use of x-rays, and by the 1930s, physicians began to specialize in using x-rays to diagnosis specific medical conditions. In 1956, physicians began adding another new technology--ultrasounds--to their clinical repertoire. A decade later, in 1967, yet another new technology was added to the radiology arsenal, the MRI (magnetic resonance imaging). In the early 1970s, the CT was introduced, providing another important imaging modality for radiologists. Advances continue to be made in this field, and in 2004-2005, a series of studies using digital mammography showed the potential of this new diagnostic aid over traditional mammography. As this brief overview illustrates, advances in technology have continually expanded the range of medical uses of radiology, stimulating an increasing need for radiologists.
Today, radiology is broadly divided into two sub-disciplines, diagnostic radiology and interventional radiology. Diagnostic radiologists use a wide and sophisticated array of technologies to diagnose a series of medical conditions, while interventional radiologists use radiation and other processes to treat the patients. A fundamental distinction between them is the degree to which their work requires interaction and contact with patients. Diagnostic radiologists help other physicians better understand the nature and extent of specific illnesses and conditions: their work requires them to interpret digital images that are transmitted to them by hospitals, clinics, and physicians. Typically, most diagnostic radiologists have strong relationships with primary care and specialty physicians who order these scans and images, but they seldom interact directly with the patients, and their interactions with the physicians who order radiological scans are commonly by email or phone. In contrast, interventional radiologists interact directly with patients and the other primary care or specialty physicians: proximity is a necessity. Because this paper is focusing on the dimensions of radiology that are amenable to offshoring, it will concentrate on diagnostic radiology.
After medical school, diagnostic radiologists in the U.S. must complete a five-year residency and pass a board certification. (2) At this stage, some enter directly into practice, while others opt for a one--or...
NOTE: All illustrations and photos have been removed from this article.
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