Outsourcing of Hospital Services

Outsourcing Services and its advantages

In order to reduce operational costs, become more competitive, and to tackle financial pressure, the Deaconess Clinic in Billings, Montana, have designed and implemented strategy of outsourcing.

The advantages in having the outsourced work performed within the hospital were mostly related with the satisfaction of the workers. When the hospital outsourced its cafeteria food services, the employees felt a sense of ownership of their jobs and felt to be associated to the hospital because of the family atmosphere in the kitchen and cafeteria. Performing the outsourcing in-house would be easier for the management to maintain the quality of the food, and minimizing the risk of contamination from outside.  If a different hospital outsourced its food service but decided not to have the work performed in-house, then they might have to face a problem of employee turnover because the employees might be disheartened and lose the feeling of being connected to their work and hospital. This might hinder their willingness in job and it is more likely that employees might leave the job due to the new strategy the company just adopted. On the contrary, the hospital could also save expenses and utilize the vacate cafeteria for diffent other purposes such as warehousing or storage.

Pros of outsourcing:

• ·         It can lower the costs as compared to the work done in house
• ·         Reduces the investment capital for production
• ·         Provides competitive advantages

Cons of outsourcing:

• ·         Loss of control may result in problems like customer complaints, quality issues
• ·         Outsourcing may cause negative impact in customers and investors
• ·         It may create competitors for the future, which can creates problem for the organization in the near future.

Outsourcing housekeeping service

In reference to the case, these days financial pressures is not the only reason for the outsourcing, hospital executives are finding more reasons to consider outsourcing. There are many other factors that lets the company decide whether to outsource the work in-house or through external sources. The factors could be available capacity, expertise, quality consideration, nature of demand and so on. Having the outsourcing work performed inside the hospital allowed the employees to feel more connected to the hospital and had build up a sense of ownership and accountability to their jobs. The staffs felt more connected as there was a family atmosphere in the working area inside the hospital which reduced the employee turnover and more activity to take place increasing productivity and progress In Work.

Another hospital to join the laundry service

Outsourcing the laundry service for another hospital to join in will somehow benefit the hospital as staffing issues and utility costs are complex and time consuming managerial decisions that must be dealt with on a daily basis. If the hospital could join with other hospitals to outsource their laundry service, it could increase their bargaining position. They could manage to get lower price from laundry service provider, and also set and maintain their own standard in cleanliness. Hospital will also be able to save unstable energy costs, rising fuel costs and labor issues are all areas that directly affect the cost effectiveness of operating laundry services on their own. By outsourcing laundry, the hospital can count on a guaranteed stable price as well as eliminating the uncertainties and worries of operating their laundry on a daily basis.

In short ,

·         Outsourcing Housekeeping might be more cost effective than hiring them in House.

·         Outsourcing builds up a competitive advantage within the industry.

·         Outsourcing would help the hospital concentrate on their core jobs and areas of work to be performed.

Conclusion ,

The Hospital approached a rival hospital about joining it in outsourcing laundry service , there might had been a number of reasons. The most important being the following: reduced costs, reorganizing the staff structure, increase the level of working capital, improve the quality of products and services and reducing the level of business risk.

References:

Stevenson, W.J. (2009). Operations management. New York: McGraw-Hill.

Davis, A. C. (2003). Fundamentals of Operations Management. New York: Mc Graw-Hill