US versus Indian MT

Well, the battle line is drawn and going by the amount of dissatisfaction with most of the MQ and Spheris jobs being outsourced to India, one must start thinking that there is something seriously wrong on this front. I just looked into a few MT forums and what I read there is really outrageous.

"I was laid off from Cbay & later MQ as well because they were sending so much to India. These greedy corporations have ruined what used to be a good industry, while endangering patients' health and privacy by sending the work overseas. They can't go bankrupt fast enough for me, and with the hundreds of thousands of dollars worth of bonuses for the head chiefs, I doubt it will take long. It seems to be the new way of corporations these days anyway -- get in, run the little guys out of business, move numbers around, take huge bonuses & get your money off the top, then let it sink...."

"we are now called "medical language specialists". What a joke. We should be called "translators" because most of our time is spent trying to figure out what the foreign doctors are saying in broken, horrible English. We can't make a decent paycheck because our line counts are so low. I make about $100 per week now, when I used to make $600-$750 per week. I am a very fast and accurate typist (120 wpm) and have been doing this type of work for 30 years. Do not waste your time working for these slave-drivers. They want Indian workers? Let them have them."

"If you make a little mistake, you are threatened with termination. TERMINATION is the constant threat. The morale in this companyis terrible. If you request anything, you are threatened with Termination. Don't work for these people. They treat their workers like SHIT. One day, when they are stuck with all Indian workers who can't spell or speak English, and their clients ditch them, they will be sorry."

These are just the tip of an iceberg, maybe in the near future, we might see even more aggressive remarks.



© 2010 Ranjan Kumar

Cbay versus Spheris

The continuing decline of Spheris in MT industry makes one perplexed as to why the MT giant lost the battle to its Indian counterpart Cbay Systems which is continuing to grow at a pace that is now compared to even Infosys and Wipro. Just a couple years ago, you asked anyone in India, which is the biggest medical transcription company in India and pat came the reply, Healthscribe (Now Spheris or Cbay don't know for sure!!!), but things are different now. The continuing losses at Spheris have been accumulating for years. The Spheris management has blamed a combination of factors, from delays in implementing technology to lost business as customers defect in an industry splintering under pricing pressures. According to Spheris Inc. CEO Dan Kohl, not a happy man these days, “I am not satisfied with where we are at this point. I want to see a clear sign that customers are happy with us and that we’ve begun to really turn the corner in a positive way, which will mean signing some new business, feeling good about that and stopping the losses.”

The eternal question everyone has on their mind is can Spheris right the ship and retain its No. 2 market position in US and now in India is a question that is perhaps most worrisome to its strong workforce both in US as well as India as well as about 500 health systems, hospitals, and group practices throughout the United States that have for so long depended on the excellent services rendered to them by Spheris.

But the financial status is really very sad. The net revenue, which reached $52.3 million in the first quarter of fiscal year 2007, has fallen every consecutive quarter since, to $40 million in the second quarter of 2009. After that the company terminated its voluntary registration with the U.S. Securities and Exchange Commission and after three weeks the CEO Kohl resigned after just 13 months into the job, and Spheris announced that they have hired a new high-powered turnaround consulting firm to sail the company through the troubled water by debt restructuring.

Thus started speculations and the rumor mills about Spheris's future. By closing the curtains on its finances, Spheris has opened the door to speculation regarding its future. The Nashville Business Journals apparently referring to my earlier blog post "Cbay, Spheris, Medquist or they are alll one now" said, "Whispers range from a sale to a bankruptcy, with the former gaining steam in the past week after a blogger in India reported competitor Cbay Systems Ltd. had struck a deal to buy Spheris’ operations in that country."

Both Spheris and Cbay have declined to address the potential sale, though no one has denied the deal. Though Spheris is trying to its best to sound most optimistic and in fact according to Spheris spokeswoman Lisa DeMoss, “Customers are a central focus in this process, and we are confident that we are taking the right steps to meet the needs of Spheris’ customers and position the company for a successful future. We are pleased with our progress to date and will continue to focus on both our operational and financial initiatives.” The fact is that there is suspicion over Spheris's ownership as well.  According to reports, private equity firms Warburg Pincus and TowerBrook Capital Partners as the majority shareholders in the company sharing about 83 percent stakes between them, 55 percent of Warburg Pincus and 28 percent TowerBrook Capital Partners. However, the interesting fact is that Warburg Pincus does not include Spheris its list of portfolio companies on its Web site, though TowerBrook’s portfolio list does include Spheris.

The new consulting firm Spheris is now under the direction of is Capstone Advisory Group, which hopefully will be able to sail Spheris through these difficult financial times. Bob Butler from Capstone is the new CEO of Spheris who has to carve out a debt restructuring plan to come out of the financial mess, which is like the company owed $75.2 million under its senior secured credit facility and another $125 million in senior subordinated notes as of June 2009.

With stiff competition from Medquist and Cbay (or are they both one) as well as other major players and independent contractors working from home for an estimated $15 billion industry, the uncertain future is looming large on Spheris and so the worries keep growing for their strong workforce both in US and India. While things are looking very grim for Spheris, Cbay continues to grow at an amazing pace, so if they both became one (or are they already are in India???), it will bring a lot of respite to at least Spheris' strong workforce in India.  Lets keep our fingers crossed...



© 2010 Ranjan Kumar

Cbay, Spheris, MedQuist or they are all Cbay now

Started in 1998, as a small firm, Cbay Systems has hit big time now and is promoting itself as the number one medical transcription services company in the world.  Don't know for sure, if they are the numero uno, but going by the deals sealed by them within the last one and a half year, they are now a very big company, a 400 million dollars company or 2000 crore rupees company in India. and they are still growing. First, Karvy, then Phillips stake in MedQuist, and now if the rumor mills are to be believed Spheris India, are all a Cbay group of company.

CBaySystems CEO Raman Kumar's words will vouch for his deal with MedQuist, “This is the big one, the one we’ve been waiting for,” after the $285 million (1425 crores) deal struck with Royal Philips Electronics that has straightaway catapulted his company to the number one slot in medical transcription industry from number three. After announcing the sealing of deal in May last year, the combined revenues of Cbay Group stood at $400 million (2000 crores) and thus almost dwarfed its nearest competitor Spheris.  As per the business data, the deal was backed by SAC Private Capital Group and Lehman Brothers who put in $123 million (615 crores), thus giving them 57.8% stake in the combined share capital of CBaySystems Holdings while Philips will maintain a convertible equity stake in the company.  

With an average growth rate of around 70% since its inception, Cbay Systems has managed to achieve what no other MT company has ever achieved, taking control of US healthcare operations through its offices, franchies, offshore centers.

But, the deal might not have come to Cbay without its added litigations.  As it is well known, alleged over-billing practices have put MedQuist into financial and legal wrangles, lawsuits, compensation payouts, and a Nasdaq de-listing. Raman Kumar set his eyes on MQ some 6 years back only, according to him, “In 2003 MedQuist got into trouble. This is when we knew that the company would become a target at some point.”  From that point onward, the market leader in MT industry started taking a downward trend and showed 6% slump in revenues, thus giving the CBay opportunity to snap up Phillips' 69.5% stake at a rate of $11 per share. Being an Indian, Raman Kumar knows how the system works in India.  In his own words, “MedQuist has kept its exposure to India to a minimum because it’s a minefield. If you don’t know how to navigate the country, you can end up with problems. You need to be a specialist in India and that’s what CBay brings to the deal.” He adds, “I believe that integration will be simple. When you combine a high-price seller, such as MedQuist with a low-cost producer like CBay, you create a magnum opus.”

Though not officially confirmed yet, if rumor mills are to be believed, CBay has struck the deal with Spheris to take it over, and as it can be seen that Spheris India website http://spherisindia.com is not loading, giving the rumor further authenticity boost, that something is wrong with Spheris and everything is good with CBay.  Maybe, we can say now that only 4 large players are left in India in MT industry, CBay, Focus, Heartland, and Acusis, but it will be really interesting to know who will be the final Big TWO.


© 2010 Ranjan Kumar