Proposed Obamacare repeal impact could be seen next year

Back-office service provider Hinduja Global Solutions (HGS), which earns nearly half of its revenues from health care-related services, has said the repeal of Obamacare in the US could impact its business in the next fiscal year.

The Donald Trump-led US administration has proposed to do away with Obamacare, or the Affordable Care Act, which brought a large number of Americans in the insurance net. The decision is pending as the US administration has now sought 90 days to resolve a lawsuit over the matter.

Companies such as HGS and other business process service providers are in the business of managing insurance claims in the US.

HGS expects further growth in the health care segment from the current 48 per cent. As of March 31, 2017, the company’s revenues stood at Rs 3,711 crore, an 11.5 per cent growth rate over the previous fiscal year. The company reported a 77 per cent rise in net profit to Rs 179 crore for the year.

“The Affordable Care Act has brought in many new people under the insurance coverage system. And we do not yet know how that is going to change next year and the impact of that will only be visible in the next fiscal year. There is pressure on that industry to bring in efficiency and cut costs, whether it is a Republican agenda or a Democratic one. Our basic proposition is adding value to our clients' businesses and help them cut costs,” said Partha DeSarkar, chief executive officer, HGS, in an interview on the phone.

The company expects growth to come from all sub-segments of the health care business, which is predominantly focused on payers (hospitals and health systems) and providers (insurance companies).

HGS invested nearly Rs 177 crore in the last fiscal year and set up a centre in Jamaica, the US, and the Philippines, and four in India, and hired 5,000 people. Last year HGS increased its headcount in Jamaica to 1,900 from 1,000.   

DeSarkar said the company’s revenues should grow between 10 and 12 per cent in the current fiscal year on the basis of a constant value of the dollar.

However, whether rupee appreciation against the US dollar impacted the company's operating margin, which stood at 11.9 per cent in the last fiscal year, was something to watch out for, he said.