In the modern competitive business world, organizations can rarely be sufficient in all services and goods that they require to remain operational. Therefore, it is imperative for them to outsource some of their internal personnel and equipment. The goal is to ensure that they have enough room to handle other crucial processes. Outsourcing not only saves resources but also enhances organizational efficiency. Various sectors, including educational institutions, sports, security, financial, and healthcare businesses have embraced outsourcing. The paper focuses on the latter as one of the industries that have largely embraced outsourcing of services and supplies.
Prevalence of outsourcing in the healthcare industry
According to Balakrishnan, Eldenburg, Krishnan, and Soderstrom (2010), many healthcare organizations are turning to outsourcing due to the unavailability of some of services that are important in the running of modern value-based care. In-house service providers are not able to supply some crucial services in health organizations. Such services include medical engineering services, food, and pharmaceuticals. To reduce the cost of running health organizations, Jillapalli and Jillapalli (2014) reveal how outsourcing is coming in as a great economic venture. According to Brown and Fink (2012), health organizations are seeking the services of contractors when they wish to put up structures. Besides, they need human resources and recruitment firms in hiring medical staff, food suppliers to provide foodstuffs for employees and patients, information scientists to install information communication technology devices, and medical engineers to repair and install medical equipments. Outsourcing has been considered cost-effective.
Outsourcing trend in healthcare
There is an increased shift towards outsourcing of healthcare services. A research by modern healthcare annual outsourcing survey realized a 13.1% increase in healthcare outsourcing between 2011 and 2013 (Balakrishnan et al., 2010). About 35% of healthcare providers in the world rely on outsourcing for some service delivery. Increase in complexity of health services and the need for value-based healthcare across the world has hastened the need for outsourcing. Balakrishnan et al. (2010) confirm that the move towards best practices in healthcare provision has also recommended the cutting of cost in health provision. To cut the cost of service provision in healthcare organizations, outsourcing of services such as biomedical services, food supply, information communication technology, and human resource management is imperative (Bennie, 2014). Young and Macinati (2012) reveal how dependency on in-house employees for service provision may prove expensive, especially since some services are seasonal. After the service is installed or provided, this finding implies that a huge period may elapse without the organization requiring the service again. For example, installation of ICT system in a healthcare institution may be a one-off activity. After the installation, the organization may take several months or even years without requiring the services of the provider. If the employees are trained in information technology and/or are inducted on how to use the instruments, they can carry out maintenance or even install programs. This situation makes the employment of ICT technicians and managers redundant and wasteful.
Organizations that are experiencing Growth of Outsourcing in Healthcare
Today, both small-sized and large healthcare providers are turning to outsourcing. Tri-county Memorial Hospital and Whitehall offer a good example. However, the trend of the increased need for outsourcing is skewed towards small and medium healthcare providers. Balakrishnan et al. (2010) assert that small-sized healthcare organizations outsource more due to inadequacy of some service providers. Small-sized healthcare organizations struggle to cut costs. Young and Macinati (2012) reveal how inadequacy of resources makes small-sized organizations turn to outsourcing services. Such organizations employ a few health workers while outsourcing others. This plan saves on the cost of salaries and training of the would-be in-house health workers. On the other hand, major healthcare providers are better equipped. They have more funds compared to small and medium healthcare organizations. Major healthcare providers therefore require little or no outsourcing of service providers since they have enough in-house providers. However, an increase in demand for value-based healthcare has resulted in stiff competition for healthcare. To remain on top in terms of quality service provision, big healthcare providers therefore face the need to outsource some services (Bennie, 2014). For example, they may require installation of modern and hi-tech information communication technology systems that its in-house technicians have low or no skills to handle the process. In such a case, hospitals have to outsource.
Experience of Healthcare Organizations that have tried Outsourcing
According to Bennie (2014), most of the healthcare organizations that have focused on outsourcing have reported a positive encounter. Some health organizations such as Tri-county Memorial Hospital reported how engagement of outsourcing service providers resulted in a reduction in cost, better relationship with clients, and increased employee-patient relations. Most of the consultancies that are contracted in healthcare service provision have better professionals. They are able to point at a problem with a fair eye. In-house practitioners may get used to the management of healthcares and shy away from openly counseling them about major problems that are facing the organization. Engagement of these consultancies with a variety of organizations with different problems makes them more experienced than in-house practitioners. They become better in terms of service provision.
The cost of running healthcare provision has definitely gone down following a reduction of the operational cost. Bennie (2014) asserts that outsourcing of healthcare services engages the services of an experienced and better-equipped consultant. Jillapalli and Jillapalli (2014) observe that since consultants are better equipped in terms of professionals and materials that are required for accomplishment of a particular task, they are able to charge lower rates to their clients. Lowering the cost of production and service provision is an advantage to healthcare providers. For example, a healthcare provider may not be equipped with modern technology when building a modern theater. However, a contractor who has been engaged in building of wards in different hospitals may be equipped with both workforce and materials. This situation cheapens the putting up of such a structure. As a result, the cost of putting up the structure will be lower.
Potential Areas of Service that can be outsourced
Various healthcare services can be outsourced. Over the years, healthcare service providers have opted for outsourcing of labor and supplies that are not a requirement for healthcare competence. Such services are not part of the basics that a healthcare should have. However, they are important in ensuring quality and efficiency. Jillapalli and Jillapalli (2014) observe that outsourcing of services and supplies are considered cost-cutting measures in most healthcare organizations. These services include food supplies, laundry services, and housekeeping. It may be very expensive for a hospital to rent or buy land, plant, manage, and/or harvest cereals and vegetables for consumption by patients and employees. In fact, most of the healthcare workers are not trained in such skills. Hence, it will not be cost-effective. However, outsourcing of some services may be more cost-effective relative to others. One of the areas that are considered cost-effective is information technology. Most of the services in the modern hospitals are computerized. Jillapalli and Jillapalli (2014) affirm that an increase in the need for information technology in healthcare has resulted in unprecedented demand for information technology in hospitals. Hospitals will outsource IT services mainly for purposes of data collection and analysis. Since the installation of information technology is a one-off activity, healthcare providers save money by outsourcing such services. After installation, healthcare workers are trained or inducted on how to apply the systems in their work. Training of employees on the use of such systems is also cost-effective since employees will be trained in a workshop. Hospitals also outsource IT maintenance services. This plan is considered cost-effective when compared to hiring in-house IT engineers and technicians on a monthly salary.
Brown and Fink (2012) assert that outsourcing of clinical services in the modern healthcare institutions is also considered lucrative. Over the years, healthcare providers in the US, for example Barnabas Health, have outsourced staff members for emergency care units. Other clinical services that have been considered more lucrative include radiotherapy and dialysis. Bennie (2014) observes that most healthcare organization will outsource these services since the required equipments are very expensive. For example, radiotherapy machines are very expensive. Young and Macinati (2012) observe that dialysis and radiotherapy machines are expensive for small and medium-sized organizations to purchase. It will therefore not be gainful to purchase such machines for starters. Hiring of specialists to operate such sophisticated machines is also a very expensive venture. Moreover, these sophisticated machines for radiotherapy and chemotherapy are used for a temporary contact with patients. Outsourcing such services has therefore reduced the cost of running medium and small healthcare institutions. Outsourcing of supplies and workers on temporary basis is therefore lucrative compared to installing and hiring experts to operate them on a monthly salary.
Best Practices to Consider to ensure Successful First Outsourcing Efforts
According to Young and Macinati (2012), the best practices in healthcare outsourcing dictate that it is important to consider several factors before engaging the services of a healthcare consultant. To begin with, it is important to consider the history and capacity of the consultancy company. Some of the companies that involve themselves in consultancy in medical care are ill equipped. Such companies will therefore not be in a capacity to ensure that all errors are checked. According to Brown and Fink (2012), inadequacy of staff and equipments may result in poor supply of services to the client’s institution. The second factor to consider is the flexibility of transcribers. Some transcribers in healthcare provision are rigid. They may not adjust to the needs and goals of an individual organization. The outsourcing healthcare provider should therefore communicate its need clearly and vet the transcriber for flexibility. Since organizations are unique, it is important to hire the services of a transcriber who does not rush to accomplish and replicate assignments (Jillapalli & Jillapalli, 2014). Thirdly, it is important for the outsourcing healthcare to monitor the ability of the transcribers in proofreading their work. Many transcribers in health service provision underrate the importance of counter checking medical terminologies. It is vital to ensure close monitoring of the service provider since poor proofreading can result in confusion and death of patients. Since healthcare providers rely on their reputation to remain in business, it is important to have accuracy of work, quality, and value as the transcribers’ driving force.
The Necessary Management and organizational structure changes
According to Brown and Fink (2012), organizational structure of a healthcare institution affects the efficiency and effectiveness of outsourced services. The available structure should therefore be adjusted to ensure that the transcriber is accommodated during the period of his or her engagement. For example, a structured system should be established to direct the departments that are likely to be involved or affected by the transcriber’s work. During the period of engagement, the affected departments can be relocated to other offices. Alternatively, health workers in such departments can be incorporated in other departments where they can still deliver their services. In some cases, the board of management of the outsourcing healthcare institution may require to set aside some of its in-house employees to monitor and assist transcribers in the execution of their duties. For example, a resident IT officer can be engaged in a situation where the transcriber is an ICT institution installing information technology device. As Jillapalli and Jillapalli (2014) confirm, situations that increase their departments through outsourcing, for example in hiring of employees and/or when recruiting, may require a structure that accommodates new employees and their roles. It is important for transcribers to understand the organizational structure of their clients in order to maximize their efficiency.
Outsourcing of healthcare services has been highly embraced in the healthcare industry. Since best practices in healthcare emphasize cost reduction and value addition, many small, medium, and large healthcare institutions are choosing to engage transcriber services. Healthcare providers who have engaged outsourcing services have reported a positive impact in cost reduction. In most cases, healthcare providers outsource the services of human resource consultants when hiring staff, laundry services, information communication technology, and clinical services such as radiotherapy and dialysis. Such plans are considered high-cost reducing engagements. Organizations should ensure proper vetting of transcribers. Besides, they should establish proper structures to accommodate and/or adjust to their presence.
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Brown, P., & Fink, L. (2012). Human Resource Outsourcing in Health Care: Strategic, Cost, and Technical Considerations. Southern Business Review, 37(1), 51-60.
Jillapalli, K., & Jillapalli, R. (2014). A Prescription for Medical Outsourcing Success in the Affordable Care Act Milieu. Journal of Global Marketing, 27(5), 285-297.
Young, S., & Macinati, S. (2012). Health Outsourcing/Backsourcing. Public Management Review, 14(6), 771-794.