Increasingly, outsourcing is becoming a watchword for many organizations in many disciplines, both in the private and the public sector. In 2003, the global outsourcing market was estimated to be US$353 billion, and in 2004 it is expected to be US$406 billion (Caldwell and Cantara 2002). Like private sector organizations, hospitals are increasingly outsourcing services from food/cafeteria and security and facilities maintenance to the consulting and training of personnel1 and information technology (IT) functions. Also like private sector organizations, while hospitals seek the cure that will improve services at less cost, without careful management the cure can be worse than the disease. This could leave the hospital struggling with two unpalatable choices: either living with an underperforming service provider and/or skyrocketing costs until the outsourcing arrangement limps to the end of its term, or terminating the arrangement and incurring the resulting delays/failures in the services and potentially serious financial penalty payments to the outsourcing vendor..
This article is intended to guide hospitals engaged in outsourcing on how best to manage each stage in the transaction to ensure that the outsourcing successfully achieves the objectives of the hospital.
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