4. Your friend has started a medical billing outsourcing business. His clients a

Question

4. Your friend has started a medical billing outsourcing business. His clients are mainly doctors. After the patient gets treated, the doctor’s office sends your friend’s company the paperwork for each patient (e.g., the reason for the visit, diagnostic tests done, referrals made, complexity of the visit, nature of treatment given, details of patient’s insurance, etc.). Your friend’s company then files the insurance claim with the respective insurance companies, sends them the details of the claim, follows up with them for payments and clarifications, collects payments, and then makes the payment to the doctor. Thus, the main clientele are independent doctors who have outsourced the insurance work to your friend’s company. Hospitals and patients are not your friend’s customers. Your friend is interested in knowing the number of employees he needs to hire in the next three to four years (long-range HR planning). He has asked you for your assistance in identifying the appropriate method for forecasting HR supply and demand for his business. Discuss the methods you would suggest and the justification for the methods or methods.

Explanation / Answer

My friend's outsourcing business will have to get the right number of people with right skills so that it is able to deliver on its professional commitments. The company will need to follow the method of HR planning process method. The first step in this method is to forecast the HR supply. Forecasting the supply will help the company establish whether the HR supply is sufficient to match the future HR demand. Now supply forecast will involve forecasting external supply (i.e. supply from external labor force i.e. outside the organization) and forecasting internal supply (i.e. within the organization). External HR supply can be forecasted through a mix of qualitative and quantitative methods by using the following information - economic growth projections, public policy, trends in labor force participation and immigration and emigration patterns. Internal HR supply can be projected using data from HR audits. As the company is a new set up, trend analysis will not be done easily as data regarding the past trends will not be available. The company can use a skill/competency model for skill matching. The company should also consider using (after 2 years) Markov analysis. This method will help the company forecast internal movement of the employees. Factors like percentage of employees remaining in the job, percentage getting promoted or transferred etc. will have to be considered.

The next phase is the HR demand forecasting. Now, as the organization is new, it can do a trend analysis for demand forecasting. Hence my suggestion is to use a ratio analysis to forecast the demand. This method develops forecasts on the basis of ratios between number of employees needed and assumed casual factors. The company can also use regression analysis to determine the correlation between different output factors and the employment level. The future employment level can then be predicted using the changes in output factors.

The above methods are suitable for my friend's business to forecast both supply and demand. The methods are suitable as the business is a new one and as such there is no past data that can be used as a basis in many methods (like trend analysis). The methods mentioned above do not require the use of past data for forecasting HR demand and supply.

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