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Outsourcing Strategy in Hospitals

August 1st, 2005


This comic perfectly captures the sentiment of some critics of outsourcing. While outsourcing can be extremely beneficial, some organizations have gone a little overboard.

So how do you decide what to outsource? Check out this excellent white paper from healthcare management services king Aramark. It gives a fair assessment of the right reasons, the concerns, and the value proposition for outsourcing (especially non-clinical functions that are "non-core.")

I was in contact with someone from Aramark recently - they have recently entered into a string of 5-, 10-year, multimillion dollar strategic agreements with hospitals. And the best part for hospitals is this: these agreements can be structured around delivering outcomes like cost reduction, patient throughput, and visitor satisfaction! Talk about aligning interests!

We've already seen success in outsourcing in hospital IT operations. Catholic Healthcare West has 40 hospitals and 6 IT staff: they've inked a "full-service" multiyear, mega$$$ deal with Perot Systems. Some say the hospital IT outsourcing market will hit $5.2B by 2006. Physician practices are benefitting from this as well.

Some smaller hospitals are even outsourcing some ER functions. This HealthLeaders article does a good job identifying the potential pitfalls.

And finally, make sure you do your due diligence before outsourcing even non-core functions. This HealthLeaders article gives 4 things you should do prior to making the plunge.


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