Outsourcing: An essential financial strategy in healthcare

Dr (Col) S K P Matwankar

Outsourcing in healthcare, as in other industries, serves the purpose of enhancing business and efficiency within the frame work of organizational policies and procedures of the hospital. Though this concept is increasingly becoming popular, whether to outsource or not is still debated.

Why outsource?
The advantages of outsourcing are:

• Effective and efficient management of operations due to single window contact
• Minimizing long term liabilities
• By implementing laid down minimum wages, outsourcing is cost effective. Further, the purchase and storage of material can also be entrusted to the outsourcing agency to cut down on the cost of storage and store keeper.
• It ensures easy control as the administration would be dealing with the agency and not a number of workmen.
• If a reputed and professional agency is entrusted with the job of outsourcing, it provides scope for quality improvement.
• There is better commitment towards the job by staff as reputation of the outsourced agency depends on the given quality as well as output.
• It assures manpower available at all times, cutting out the worry for absenteeism and over time.
• Nil/minimum union involvement.

However, outsourcing is not without the disadvantages, which can be listed as:

• Due to floating population cost of training may increase as the new persons will have to be given training on the job
• Lack of long term commitment
• If the hospital administration is lax in monitoring on statutory requirement, it may lead to outsourced persons claiming for permanency in the organization

When to outsource?
Outsourcing should ideally be done during the project stage or at the time of commissioning of new services. It can also be need based which may be to increase the utilization of the services/equipment or increase the revenue of the organization.

What to outsource?
Ideally hardware (equipment and machinery) should belong to the organization. However, the following departments can be outsourced based on requirement

a. Core services

• Nursing (manpower)
• Diagnostic services (facility and manpower)
• Pharmacy (facility and manpower)

b. Support services

• Housekeeping (facility and manpower)
• Security (manpower)
• Ambulance services (facility and manpower)
• Laundry (facility and manpower)
• Kitchen (facility and manpower)
• Maintenance engineering services (manpower)
• Clerical and technical staff
• Front office and reception staff
• Accounts department staff
• Technical staff for medical and non medical services

Whom to outsource to?
This should be accomplished by:

• a. Inviting experts
• b. Hiring professionals/consultants
• c. Way of automation

How to outsource?

• a. By awarding contract for services.
• b. Due care however, should be taken towards legal compliance.

Appropriate language should be used while drawing the agreement. It is very important to vet the agreement to avoid legal issues arising out of misread terms and clauses relating to the labour laws/ other statutory requirements laid down by the government.

The minimum wages mentioned in the box includes in-direct costs, e.g. PF, Gratuity, Medical, etc., and is applicable to Zone-1 of Maharashtra State i.e., Mumbai. Figures for permanent employees are average of some of the hospitals in Mumbai.)

Conclusion
Outsourcing helps in high standard of best practices and if one follows the laid down labour laws of the country, wastage of manpower in terms of cost an numbers can be avoided.

(The author is director operations, Sir H N Hospital & Research Centre, Mumbai)