Why Don't We Outsource More Radiology to India?

David Leonhardt's latest New York Times column takes a sober look at the mild hysteria over the alleged outsourcing of radiology work to India. Radiologists diagnose diseases and ailments by reading x-rays and scans. A few years ago, the notion of Indians doing work traditionally reserved for American radiologists caught the attention of protectionists and free traders alike. Lou Dobbs expressed his typical indignation over the prospect of Indian radiologists stealing the jobs of their American counterparts, while George Will applauded the outsourcing of radiology as an avenue toward affordable health care. Dobbs and the protectionist camp saw unemployed American radiologists, while Will and the free trade camp saw less expensive diagnoses and lower medical bills.

There's just one problem with the ruckus over radiology outsourcing--virtually no one does outsourced radiology work in India. According to economist Frank Levy of MIT, you can use one hand to count the number of Indian radiologists reading American x-rays and scans. To borrow a sound bite from Dobbs, hospitals aren't exactly "exporting America" on the radiology front. It's also unlikely that George Will's medical bills are going down any time soon--the labor cost savings from all of three Indian radiologists won't add up to much.

1. The mystery is why more radiology work isn't outsourced. As Leonhardt points out, the radiology outsourcing myth picked up steam because the work seems so ripe for offshoring. According to the column, what does radiology have in common with other industries that are outsourcing jobs?

2. If radiology outsourcing makes so much sense, why aren't more hospitals doing it? What trade barriers or occupational licensing restrictions protect American radiologists from competition with their equally talented foreign counterparts?

3. Outsourcing destroys some jobs but may create others. Consider three types of jobs in the health care industry: surgeons, nurses, and radiologists. Why aren't nursing positions outsourced? If radiology outsourcing actually occurred on a broader scale, what would happen to the demand for American radiologists? Might outsourcing more radiology work to qualified doctors in India actually lead to health care industry growth in the United States (think about George Will's claim)? How might more radiology outsourcing affect the demand for nurses and surgeons in the United States?

Topics: Outsourcing, Globalization, Trade, Labor markets