Deaconess Clinic's Outsourcing Experience
Deaconess Clinic looked to outsourcing as a way to lessen its financial burden. The cafeteria food service and housekeeping were the tasks that needed to be outsourced. The hospital was only going to benefit from outsourcing if it took into account every component of successful outsourcing. The clinic was able to concentrate on offering healthcare services as a result of outsourcing the cafeteria food service. The clinic followed the business idea that tasks that can be successfully completed by another company should be delegated to them. Despite being integrated in most hospitals, it is clear that the provision of healthcare and cafeteria food service are two separate enterprises. As such, by delegating the service, it was evident that that clinic managed to focus on healthcare provision. On the other hand, outsourcing the housekeeping service was not much of a success. The human resources management department failed to handle the move effectively, failing to create a conducive environment for the employees.
Facts Responsible for the Issues
The issues raised above communicate the approach in which outsourcing should be conducted. Barthelemy (2003) outlines the major mistakes firms do when outsourcing. Outsourcing the cafeteria food service was successful since the Clinic had to delegate the duty to other professionals since healthcare provision and food service are different industries. As such, it was necessary to outsource the activity to ensure that it is carried out as effectively as the skilled personnel would perform it. On the other hand, outsourcing the housekeeping service failed due to what Barthelemy (2003) claims to be overlooking personnel issues and losing control over the activity. The employees felt undermined once the housekeeping service was outsourced. This resulted in low morale, demotivation, and a disconnect from the activity. The hospital failed to address such personnel issues as it let the outside firm take over the activity. This brought about the issue of losing control over the housekeeping service. As such, the employees felt like the outside firm detached them from the service, rendering them redundant.
Tentative Solution
It is important that Deaconess Clinic understands the ground rules to outsourcing. To begin with, the hospital ought to outline the activities that need to be outsourced. By doing so, the hospital will understand how to enter and exit a contract. This is possible by conducting a cost-benefit and pros and cons analysis to identify the feasibility of outsourcing an activity (Choi, 2007). A cost-benefit analysis would mitigate cases of there being hidden costs, ensuring that such a contract is affordable (Choi, 2007). In outsourcing the housekeeping service, the hospital failed to conduct proper analysis of the feasibility of the idea. This led to the emergence of an underlying personnel issue, which was a clear sign that there was no evaluation of the advantages and disadvantages of such a transaction.
Follow-Up and Contingency Plan
The best possible follow-up measures to know whether the hospital is conducting the relevant feasibility tests before outsourcing would be to create internal controls, conduct audit procedures, re-evaluation, and obtaining feedback (Olson, 2013). Creating internal controls means formulating a system whereby the hospital can weigh the suitability of an activity to be outsourced. This means that the hospital would have an internal system to identify whether it would be feasible to outsource an activity in terms of costs, benefits, performance, and sustainability. In addition, it is important to conduct regular audits to assess how an activity is being conducted, whether by the hospital or an outside firm. Such audits are part of the contingency plan to identify the challenges present in conducting such an activity. In addition, the hospital should evaluate the success of an activity by seeking feedback from the hospital and the vendor, which would be weighed against the results of audit procedures to ascertain the going concern of such an activity under the performance of either the hospital or an outside firm.
References
Barthélemy, J. (2003). The Seven Deadly Sins of Outsourcing. Academy of Management Executive, 17(2), pp.87-98.
Choi, E. (2007). To Outsource or not to Outsource in an Integrated World. International Review of Economics & Finance, 16(4), pp.521-527.
Olson, R. (2013). Does It Make Sense to Outsource Utility Operations? Opflow, pp.26-27.
