Outsourcing Elements Of Our Operations Is Going To Help Our Cost Structure,
Without Having Any Degradation Of Our Patient Experience (Lesson 8)
How much of your organisation have you already outsourced? And what were your reasons? Was another organisation able to convince you that they could do something that you do, only better, cheaper, or faster?

They may have been absolutely correct. However, if you took them up on it, they may also have degraded your patient experiences. Both with the services they provide and also with related services.

So why does this happen? Surely if they are delivering the same services and saving you money, that is going to be better for everyone?

Savings And Efficiencies

The decision to outsource is typically founded on cost savings and efficiencies. And there is absolutely no doubt that someone out there may be able to handle part of your business more cheaply and efficiently than you can.

For instance, if you made pens, it could be that there is a specialist company that only makes nibs. They may be able to do this in a more cost-effective, quicker, or more precise way than you could achieve. So far, so good.

However, problems arise when things go wrong and changes need to be made.

Going back to healthcare, good organisations are always looking to continuously improve and make changes in order to achieve their patient purpose. To do this effectively, it is important that they are constantly looking at how they can make changes in every part of their organisation.

Boxing Yourself Into A Corner

If you’ve outsourced various components, it’s impossible to make changes related to those things. This is because outsourcing is typically done under contract with a scope of work.

It’s a carefully measured and managed approach. There is no flexibility. You cannot ask for things outside the scope of the contractual agreement, unless you pay more money. Paying more money defeats the whole object of outsourcing.

If services are being provided in-house, then you’re already paying your staff. This means that, if you need to make a change, you can just go ahead and do it. There’s no complexity to that. There is no barrier to making a change in the way there is if you’re outsourcing.

There is a presumption that, when you outsource, things will remain static, and that you can outsource because you have a particular functional box that needs to be ticked. The problem is that you can’t guarantee that the functional box will be exactly the same forever.

Example: Saving Them Money Or Bleeding Them Dry?

A healthcare facility used to do their pathology services in-house. They decided to outsource because an external pathology organisation told them they could provide the same service for a particular price, with a 48-hour SLA and all these fantastic turnarounds.

The healthcare facility ran the numbers and saw it would be cheaper to outsource than to continue paying staff to be onsite to do the same work. So, they went ahead and outsourced. However, they didn’t realise there would be flow-on effects that directly affected patients.

For instance, when they had a lab technician permanently on site, if there was a patient who needed to have a fasting blood test, with their blood being taken before breakfast, the lab technician was there. The patient could just walk down to the room, and the lab technician could take the blood.

This was really good from a patient experience perspective because the patient didn’t need to change their behaviour in order to meet the needs of the system. Once the pathology service was outsourced, and the lab technician only worked from nine to five, this was no longer the case.

All of a sudden, the patients who needed their blood taken before breakfast couldn’t get it done, unless the healthcare facility ordered a specific special service. And this special service cost a lot more.

When the healthcare facility outsourced, they didn’t think about that component because the only people who knew about taking fasting blood tests early in the morning were the lab technicians who worked on site. The leaders didn’t have a discussion with the lab technicians around what their job really looked like.

Instead, they just looked at how much they were paying that person to fulfil a particular function, and how much they could be paying an external company to do the same work.

As a result, it ended up costing more. And not only because they needed to pay for the specialty service for blood tests that occurred outside of business hours.

There was also another problem. What usually happens between 7:00 and 9:00 a.m. in pretty much every major metropolitan city?

You’ve got it. Rush hour!

Because the pathology services had been outsourced and the lab technicians were only on site between 9am and 5pm, if there were unexpected delays with the traffic, then the knock-on effect was massive.

Blood tests were being pushed out by a day or two and sometimes even longer. These delays had a huge impact on the patients. After all, the healthcare facility was doing blood tests on patients in a hospital, not fixing someone’s car.