Outsourcing refers to the process of contracting specific tasks, services, and business processes to outside contractors and entities. Outsourcing is one of the most effective strategies to increase operational efficiency, reduce costs, and tackle shortages of skilled labor. In the current era, business analysts utilize this perspective in different scenarios and they attain long-tern benefit from the perspective of outsourcing. Outsourcing is prevalent in all sectors of the economy including services, manufacturing, customer services, information technology, and retailing. The outsourcing trend is also increasing rapidly in the healthcare industry due to the challenges faced by healthcare enterprises. Many healthcare service providers including hospitals also outsource specific processes to decrease costs and increasing operational efficiency (Lawrence, Firth, & Khumalo, 2013). This would benefit the hospitals and different doctors too because they can benefit a lot from this perspective.
The prevalence of outsourcing in healthcare is increasing at a rapid rate due to several operational challenges and reduction in the skilled workforce. Healthcare organizations in the modern world have concerns regarding profits and bottom lines due to high costs linked to the increases in service quality. Most healthcare providers already outsource several processes that do not make up the core capabilities including laundry, food, housekeeping, and supply chain management.
The increased expectations of patients with respect to service quality and subsequent increases in costs adversely affect the bottom line of healthcare providers. Many hospitals outsource several business processes in the modern world including information technology, clinical services, security, and customer relationship management. The Health Insurance Portability and Accountability Act (HIPAA) mandate the implementation and deployment of an exclusive and secure IT system in healthcare facilities. However, the shortage of skilled IT experts in healthcare facilities forces the hospitals to outsource IT functions. Healthcare institutions are outsourcing several processes and functions to reduce costs, increase quality of service, and tackle the challenges of skilled labor shortages. The prevalence of outsourcing in healthcare is evident from the practice of outsourcing several business processes to specialized entities throughout the United States. Different developed nations of the world focus on outsourcing certain facilities because they can reduce the cost through such aspects and this would benefit the patients in the longer-run. Healthcare executives face the challenge of increasing quality of healthcare services for patients along with a reduction in costs and increasing operational efficiency. Most healthcare executives rely on outsourcing in the modern world to achieve multi-faceted objectives that involve increasing service quality and reducing costs.
Outsourcing enables hospitals, pharmaceuticals, and health insurance organizations to focus core competencies and contract specific processes including information technology, security, warehousing, supply chain management, and customer relationship management to specialized organizations. Through effective outsourcing, scenario hospitals can reduce a considerable amount of cost and they can attain self-sufficiency through this aspect. The IT outsourcing market is increasing at a phenomenal rate, and experts expect the market to grow at an annual rate of 7.6 percent. The healthcare IT outsourcing industry can increase to $50.4 billion in 2018 from $35 billion in 2013 (Monegain, 2013). Healthcare industry is one of the leading industries along with legal and financial services that are experiencing a significant increase in outsourcing. Healthcare outsourcing is experiencing a significant increase due to the enhancements in cost reduction, change management, mitigation of risks, and increments in service quality. The outsourcing trend in healthcare is also increasing due to reforms in health care and pressures reduce costs in several areas of operations. Several patients also desire for cost reduction and they appreciate aspects like outsourcing because they believe that through such aspects, health care organizations can reduce their respective cost and their performance would include through such scenarios.
The structural composition of the healthcare industry in the United States forces most healthcare entities to outsource IT, support, and clinical services. Outsourcing is prevalent in all forms of healthcare institutions including pharmaceuticals, healthcare systems, and health insurance. Although pharmaceuticals and health insurance organizations outsource specific business processes including human resources, information technology, and financial management but hospitals outsource several processes.
Hospitals are the primary drivers of the increasing trend in healthcare outsourcing due to the challenges of increasing operational efficiency and regulatory compliance. Information technology is one of the most heavily outsourced business processes in hospitals primarily due to compliance with HIPAA. HIPAA necessitates the presence of a dedicated and secure information system in healthcare service providers including hospitals. However, the lack of skilled in-house IT experts influences most hospitals to outsource IT functionality (Roberts, Henderson, Olive, & Obaka, 2013). Hospital executives also outsource several other processes including warehouse or supply chain management, clinical services, revenue and expense management, and administrative services.
Outsourcing enables healthcare organizations to reduce costs, increase operational efficiency, and enhance service quality. Information technology is one of the highest processes outsourced in hospitals and healthcare facilities. However, many healthcare facilities also outsource primary functional areas and services including clinical services, emergency departments, and consultation functions. The Jackson Health System comprising a network of six hospitals in South Florida faced severe criticism for considering outsourcing primary services. The management of the hospital system proposed outsourcing emergency room physicians, assistants, and advanced nursing practitioners. This might not be a viable strategy because a health care organization should always outsource facilities that are not their working sphere. Health care facility also considered outsourcing billing and collection services leaving nurses as the sole in-house medical practitioners (Bird, 2012).
Outsourcing enabled most healthcare organizations to reduce costs, adapt to changes, mitigate risks, and redefine value chains and streams. Many healthcare organizations indicate several benefits of outsourcing including reduction in costs, enhancement of healthcare delivery outcomes, and patient satisfaction. Conversely, several adverse effects of outsourcing clinical and non-clinical services included loss of control, excessive dependence on suppliers, and lack of flexibility (Guimarães & Carvalho, 2011). Cost might reduce with the advent of time but certain third party companies might take an advantage of this perspective. The performance of the outsourced facility solely rests on the performance of the third part. That is why several organizations working in the health care sector spend time but they do not outsource because they believe that they cannot risk their reputation.
The Saint Barnabas Hospital in New Jersey had a positive experience of outsourcing due to the cost reduction and the fulfillment of workforce shortages. However, the president and CEO of the organization implied that the trend of healthcare outsourcing would decline when organizations increase in size (Budryk, 2013). On the other hand, a TransUnion consultancy service indicates that hospitals increase quality of service and reduce costs by outsourcing several secondary functions (Herman, 2013). The Greeley Company indicated that hospitals benefit significantly by outsourcing several clinical services including ER staff, anesthesia, dialysis, human resources, and diagnostic imaging (Punke, 2013). Conversely, most healthcare organizations have positive experiences with respect to outsourcing primarily due to reduced costs of operations. Specialized outsourcing firms enable healthcare organizations to enhance service quality and standardize services throughout the network of hospitals (Cocchi, 2013).
A health care organization can outsource some of the primary and secondary services based on their expertise. However, outsourcing secondary services would increase proficiency in the organization while outsourcing primary services would reduce the cost to a considerable level. However, outsourcing of primary services can be a tricky strategy because customers might face negative circumstances and the reputation of a certain health care organization might suffer in this regard (Roberts, Henderson, Olive, & Obaka, 2013). Numerous organizations that outsource a mix of for operational excellence and they reduce their respective cost with the advent of time. The easiest facilities to outsource with regard to cost can vary with the advent of time. It requires effective resources and the decision makers would decide on these scenarios. Organizations can save their major cash by outsourcing certain primary activities, which might be expensive if they perform these activities in-house.
Outsourcing can only be beneficial in scenarios when hospitals choose their respective partners properly. They should evaluate their strengths and weaknesses and through this scenario, they can attain beneficial results in the longer-run. An integrated partner can be a viable choice in this regard, as this would enhance the effective performance of an organization and reduce cost at a considerable level. The best practices would focus on the management of general affairs of hospital, primary medicinal services, emergency power systems, controlling sophisticated laboratory and surgical environments. An organization that would regard such services can attain long-term benefits and they can reduce cost through such practices (McWay, 2013).
An outsourcing partnership brings together two different organizations together with respect to cultures and they communicate with each other through this scenario. This would allow them to attain long-term benefits by enhancing the performance. There are certain negative scenarios that prevail in health care organizations and in order to curtail the issues of health care workers and reduce cost an organization should try their level best to appoint a mentor. A mentor is the one that would resolve organizations problems and keep track of different unknown waters. A mentor can keep track of all the problems and obstacles that can cause issues for the patients (Lawrence, Firth, & Khumalo, 2013).
Changes occur when the decision makers decide to transform the health care industry by making quick decisions. Hospitals face financial disparities because of the balanced budget Act and they have to manage their expenses properly because of this perspective. Organizations of health care industry have to reduce the cost to a considerable level and they have to maintain proper health care facilities to ensure satisfied customers. However, when organizations outsource their facilities they face difficult scenarios. Several employees resist this change because they believe that they cannot sustain their position in this perspective. They resist the outsourcing scenario and create hurdles through their strategies. Organizations usually hire a change agent that takes such decisions and motivates the employees through different strategic measures. Lower level staff, which includes janitorial staff, helpers, small technicians, etc., resists the element of outsourcing because they fear that they might lose their jobs. An organization should try their level best to implement change from the top tier of the organization and they should change the managerial facilities of the organization initially. The core decision makers should identify the cost increasing elements in the hospital and they can outsource to another party, which would allow them to save a certain amount of cost. However, a health care organization should always try their level best to focus on different primary factors by which they can attain satisfaction of patients. There are different hospitals that outsource certain primary factors too and they receive criticism because of this.
Conclusively, outsourcing is not a bad managerial perspective but it all depends on the fact that how well an organization implements it. An organization placed in the health care industry should solely focus on the fact of reducing cost and customers can attain long-term benefits. However, it all depends on the fact that how well organization implements such facilities and change should not occur on theoretical basis but practical implications of this scenario would take place to attain beneficial results. There are different proven successes stories of organization placed in the health care industry that benefit through this perspective.
References
Bird, J. (2012, August 22). Hospital system examines outsourcing ER docs. Retrieved December 24, 2014, from Fiercehealthcare.com: http://www.fiercehealthcare.com/story/hospital-system-examines-outsourcing-er-docs/2012-08-22
Budryk, Z. (2013, October 7). Hospital outsourcing: A lasting trend? Retrieved December 24, 2014, from Fiercehealthcare.com: http://www.fiercehealthcare.com/story/hospital-outsourcing-lasting-trend/2013-10-07
Cocchi, R. (2013, April 2). Can outsourcing save your hospital major cash? Retrieved December 24, 2014, from Healthcarebusinesstech.com: http://www.healthcarebusinesstech.com/outsourcing-hospital-services/
Guimarães, C. M., & Carvalho, J. C. (2011). Outsourcing in the healthcare sector: A state-of-the-art review. Supply Chain Forum - An International Journal, 12(2), 140-148.
Herman, B. (2013, April 5). 9 Burning Trends in Healthcare Finance, Outsourcing and Transactions. Retrieved December 24, 2014, from Beckershospitalreview.com: http://www.beckershospitalreview.com/finance/9-burning-trends-in-healthcare-finance-outsourcing-and-transactions.html
Lawrence, C., Firth, D., & Khumalo, F. (2013). Improving healthcare administration: Real time locations systems or outsourcing? Information Systems Education Journal, 11(5), 49-56.
McWay, D. (2013). Today's Health Information Management: An Integrated Approach. New Jersey : Cengage Learning.
Monegain, B. (2013, August 6). Health IT outsourcing demands rise. Retrieved 24 December, 2014, from Healthcareitnews.com: www.healthcareitnews.com/news/health-it-outsourcing-demands-rise
Punke, H. (2013, October 4). Outsourcing is Exploding in Healthcare — Will the Trend Last? Retrieved December 24, 2014, from Beckershospitalreview.com: http://www.beckershospitalreview.com/workforce-labor-management/outsourcing-is-exploding-in-healthcare-will-the-trend-last.html
Roberts, J. G., Henderson, J. G., Olive, L. A., & Obaka, D. (2013). A review of outsourcing of services in health care organizations. Journal of Outsourcing & Organizational Information Management, 2013, 1-10.
