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2018 Transcription Cost Analysis

By Dale Kivi, MBA

This article identifies the transcription labor and technology cost variables commonly applied in today’s medical transcription market. Precise measurement of volumes and identification of all contract fine-print statements that can add billable items to your invoice (or artificially inflate the volume calculations per document) is key to directly comparing total expected costs between vendors or in-house teams.

Production rates still vary dramatically between outsourced service vendors; however, the industry’s reputation for manipulating how volumes are measured or what add-on costs are to be billed continues to be an issue. Accordingly, in a market widely perceived as a commodity, where volume-based rates predominantly drive purchasing decisions, these rates alone do not offer accurate cost comparisons.

Volume Measurement Clarity
Due to rampant vendor ambiguity in how volumes were calculated, AHIMA worked with the Association for Healthcare Documentation Integrity (labor association) and the Medical Transcription Industry Association (service company executives) to define “A Standard Unit of Measure” for the industry. This effort recommends the visible black character (VBC) volume counting method (each character printed on the page has a value of one, regardless of formatting) as the most accurate unit of measure. The other metric commonly used is the “65-character line” method, which counts printed characters, spaces, and tabs, then divides by 65.

In both cases, volume calculations can be validated for documents opened in Microsoft Word under the review/word count function which defines, among other metrics, “characters (no spaces),” which equals AHIMA’s intended VBC measurement, and “characters (with spaces),” which, when divided by 65, equals AHIMA’s intended 65-character line measurement.

It is important to note that header and footer content are not considered in “word count” calculations. Given that such transcription platform content is stripped away when documents upload into the EHR, the actual used header and footer volumes from these platforms is zero. Accordingly, it is common and reasonable to not pay vendors for such content. The other common artificial volume multiplier still seen in some contracts is credit for “all characters that contribute to the final look of the document,” which counts programming language that define fonts, margins, and other report formatting issues per file.

To avoid these artificial volume-inflating tactics used by some vendors to suggest low per-volume rates while actually charging more per report, request for proposal and contract volume measurement definitions should include definitive language to exclude credit for headers and footers or any other volume not instantly auditable with Microsoft Word’s “word count” tool. As a follow-through, it is critical to allow for and conduct random individual document-level volume audits that are backed by severe financial penalties.

Cost Variables/Volume Rate Impact
The other area where vendors continue to differ greatly on cost clarity and visibility is with add-on charges. Whether technology only scenarios for in-house staff production or full-service arrangements with expected technology support, it is important to quantify everything that could potentially result in a billed charge to the medical records/HIM department or to the IT department. Common costs, which are imbedded within the volume rates by some vendors while charged separately by others, include the following:

• annual maintenance/technology service agreements;
• individual user/enterprise license fees;
• implementation fees;
• interface costs; and
• miscellaneous (eg, per faxed page, e-signature access, and mobile app fees).

Depending on the vendor’s business model, such deliverables may be considered standard operating overhead covered with their volume rates while others (usually those with stronger tech-focused business models) prefer to charge for each item separately. Either way, it’s important to define all expected nonvolume-specific charges and divide that total cost by the estimated contract term volumes to determine their volume rate impact. Those calculated per-volume rate adjustments then need to be added to the base volume rates to directly compare in-house vs vendor or vendor-to-vendor costs.

Cost Calculator

* When analyzing the costs of an incumbent service or technology vendor, it is critical to begin with an audit of their volume measurement methodology. It is very common for monthly or annual volume totals to be significantly different between vendors. To accurately compare costs for competing vendors, you must ensure the same validated single volume measurement method is being applied against all technology and service sources.

Industry Standards
AHIMA and affiliated industry associations have defined medical transcription industry standards for volume-based cost measurement, quality assessment, and typical turnaround time (TAT) expectations. Google searches of the following phrases will direct you to the corresponding PDF documents:

• cost: AHIMA Common Unit of Measure;
• quality: Clinical Documentation Quality Assessment and Management Best Practices; and
• TAT: Transcription Turnaround Times for Common Document Types.

Additional Counting Considerations
Even when transcription platforms deliver documents in other than Word format, essentially any other technology format can be converted to or opened in Word. Every vendor can calibrate their transcription platform’s volume measurement tools to match Word’s calculations. Therefore, insisting audits be conducted using the “word count” tool is reasonable.

Slight volume difference can appear in large documents when measured with different versions of Word, although such differences are always just a character or two and are typically found only in documents more than 10 pages in length. Accordingly, any differences more than a character or two between a vendor’s platform count and the Word count are intentional vendor calibrations to inflate volumes.

General Market Considerations
Today’s transcription market is widely viewed as a technology-leveraged commodity service with a questionable future due to continuous improvements in front-end speech recognition and other artificial intelligence technology. Consequently, even when significant cost savings may be readily available, most provider organizations are reluctant to change their existing in-house staffing model or outsourced service labor vendors because they expect the entire process to soon become obsolete.

This aversion to making a change to their labor-intense transcription processes is actively encouraged by front-end speech recognition and EHR vendors that are committed to physician-centric documentation workflows and the technology sales opportunities they represent. On the other hand, the dramatically reduced roster of service-focused vendors view the technology (including front-end speech recognition) as the commodity and point to various peer-reviewed studies showing more than 7% of documents generated through physician-centric workflow schemes contain errors.

Driven by these recent studies, there is growing attention to physician-centric workflow quality issues, the cost of physicians’ time, and the downstream revenue impact of abbreviated documentation details resulting from quality and time concerns. Although everyone expects a constantly shifting balance between human labor and technology, critically evaluating the full organizational cost of that balance by physician and specialty (especially for the more complex reporting of difficult specialties) makes a return to transcription for some documentation volumes cost justified.

— Dale Kivi, MBA, is a former member of the Medical Transcription Industry Association’s board of directors and recipient of their Beacon Award for best promoting billing ethics and accountability to the industry. He is one of the coauthors of AHIMA’s standard “Clinical Documentation Quality Assessment and Management Best Practices” and a member of For the Record’s editorial advisory board. He also serves as vice president of business development for FutureNet, a 100% domestic transcription service provider. He can be reached at dale.kivi@fnehr.com.