Large healthcare systems hire consultants who... - Jay Posted: Jan 10th, 2017 - 11:54 pm In Reply to: Clients are never going to be "willing to pay" - anything.
...are paid to research market trends for all the products or services the system purchases. This includes transcription services. The consultants then tell the CEOs and CFOs what to pay for all their products and services, based on their market research. Needless to say, healthcare executives are not going to spend hundreds of thousands of dollars for advice and then not follow it. So in the case of transcription, large clients already have a drop-dead number they will,not exceed. If they can get it for less, all the better. But there is most definitely a ceiling that is absolute. So when I say clients will only pay so much, that is the literal truth. Therefore the client determines the starting number, and everything that follows is based on that immovable number.
So let's say that starting number is $0.12 per line--a very realistic number, by the way. That's what the MTSO has to work with; that's all there is and there ain't no more. The MTSO must then decide how to allocate that 12 cents in order to stay in business. If the MTSO is a publicly traded company, or if it is owned or controlled by venture capitalists, the expectation is that there had better be some of that 12 cents left over at the end of the day to pay the shareholders or the investors. So in reality, the MTSO C-suite has LESS than 12 cents to work with. Out of that less-than-12-cents has to come the overhead expenses required to keep the office lights on, the server farm running, the Internet online, etc., etc., etc. Then some of that not-quite-12-cents goes to the various vendors whose software the MTSO uses, unless they happen to own all their own systems, which is rarely the case. And then there's payroll, which is not just the gross amount each employee earns, but half of the Social Security contribution--about 7.5% the last time I checked. There's also Medicare contributions and worker's compensation which has to be paid out of that <12 cents. Of course, if the company offers health benefits, in most cases the company pays a substantial portion of the premiums, which is yet another bite out of the under-12-cent pie. As you can see, by this time that pie is down to a few crumbs of crust.
I said all that to say this: I absolutely believe the work we do is easily worth $0.10 a line or more. I also believe VR rates should be substantially more than half the straight transcription rate. But the reality is that NO company can pay 10 cents a line when it is only getting 12 cents a line. It simply cannot be done. You could pay the owners and investors absolutely nothing and you still would not be able to stay financially viable if you spent that large a percentage of your income on wages. There are only two ways to increase profits: raise revenue and cut expenses. But as we've already seen, there is no option to raise revenues; the market has already set a hard and fast upper limit on revenues. That leaves only cutting expenses as a means of increasing profitability. And what is the largest expense line item? Personnel costs, i.e., compensation. When profitability is the most important outcome, something has to be sacrificed, and in our industry, that "something" is compensation for the working practitioners. It's wrong, it's immoral, it's unjust--but that is the corporate mindset which is dominating our profession. Thankfully, there are still some smaller MTSOs who care more about the welfare of their employees than about squeezing out the last drop of revenue. So I don't believe it's fair to paint all MTSOs with the same brush.
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