La psicología de las multitudes de José María Ramos Mejía

Table 2.2 List of potential areas in healthcare outsourcing

Support Services Administration and Finance Clinical Services

- Housekeeping - Food services - Laundry - Maintenance - security - Human resources - Patient accounting - IT - Diagnostic imaging - Pharmacy - Laboratory

In an effort to understand the potential areas to be considered for outsourcing listed in table 2.2 which will be further explored in the survey analysis in table 6.5 addressing potential areas to be considered for outsourcing of LMIC healthcare system it is needed to explain that the term 'outsourcing' can cover many areas, including outsourcing of goods and services with the latter becoming increasingly common.

Outsourcing became a management approach that allows outsource services to a specialised and more efficient external agents, operational and management responsibility for components and processes or services previously delivered by the enterprise. ‘In reality, outsourcing is an umbrella term that includes a range of sourcing options that are external to the firm’ (Sanders, et al., 2007). In addition, Lankford and Parsa (1999) believe that the decision to outsource can lead to competitive advantages for businesses, but to be successful the decision needs to be an informed one. Good and hard detailed information in the hands of strong management can help avoid a costly step, one that is not easily reversed. Ultimately, for outsourcing in any form to be successful, quick response times to strategic opportunities and threats are essential. Effective management

36 of the outsourcing relationships is an organizational imperative. In addition, to refocusing resources onto core competencies, other strategy issues which encourage the consideration of outsourcing are restructuring, rapid organizational growth, changing technology and the need for greater flexibility to manage demand swings (Eisele, 1994; NIST, 2012). In order to achieve a substantialy needed LMIC health system reform by applying outsourcing; it must reach beyond entering into a contract arrangement. Instead, the design long-term relationship model that is based on the development of an implementation strategy framework that will guide LMIC healthcare improvement process is essential.

Also future growth has been an important dominator for consideration of outsourcing for any potential area as McIvor (2000) indicates and furthermore, the company would find it beneficial to actually retain the knowledge that can facilitate the technology of the activity to be utilized for future growth. Moreover, in relation to healthcare sector Mills et al. (2002) found substantial growth of interest in the activities of providers in the private health sector in low-income countries and in how policymakers might best capitalize on the accessibility and popularity of this sector.

McIvor (2000) and Harland et al. (2005) suggest that the mistakes in identifying core and non-core activities can lead organisations to outsource their competitive advantages and accordingly, once organisational competence is lost it is difficult to rebuild. This why the current highly competitive environment can also be referred to as an outsourcing economy which is characterized by an increased focus on core organizational activities and simultaneous leveraging of external resources, skill, knowledge, capabilities and competences. Nevertheless, making the decision to outsource and to turn the organizational culture could be a great challenge at a later stage. However, culture

37 attributes and their impact on the LMIC healthcare system improvement will be discussed in more length in later chapters.

Today, most management believe that if the business function is not its core competency, then a better value is found externally and it is an ideal candidate for outsourcing. In that sense, Quinn (2000) predicted that the most significant management challenges lie in recognizing the firm's key competence areas, finding suppliers to provide the value to the rest of the operations and managing the resulting global network of suppliers and partners. Meanwhile, from the core competency stand point, the management ideology of “focus on your core competence and outsource the rest” (Porter, 1996; Hätönen & Eriksson, 2009) was gaining popularity in various industries. Previously the knowledge base and resources were primarily searched from domestic markets, but in early 1990s firms began viewing also the international resources pools as accessible by means of what is and can be outsourced. Hamel and Prahalad (1990) found the most prominent current approach is the notion of core competencies which represents one stream of the competence-based view. In addition, the Hätönen and Eriksson (2009) research indicates that the rapid changes across industries have made core competences only temporary while the new competences are required to manage in the new economy account for constantly refining the core competences and modifying the existing pool of knowledge, skills and resources. At a later stage, the main drivers for outsourcing appear to be shifting from cost to strategic issues such as core competence and flexibility (DiRomualdo & Gurbaxani, 1998; Elmuti & Kathawala, 2000; Harris & Giunipero, 1998; Lankford & Parsa, 1999; Meckbach, 1998; Muscato, 1998; Mullin, 1996; Quinn, 1999; Roberts, 2001; Wright et al., 2001; Kurdia et al., 2011). Nevertheless, initially outsourcing was thought off while industries were facing major productivity challenges. An example now is the Turkey health policy in Turkey which faces important challenges

38 in further improving the health status of the population and enhancing the efficiency of the system (OECD, 2008).

Without any question, there is still a debate in the literatures as to exactly what a core function is, but a truth is the core function should have a bearing on whether or not to outsource it (e.g. Quinn, 1999; Drtina, 1994; Jenster & Pedersen, 2000; Quinn, 2000; Lankford & Parsa, 1999; Kakabadse, 2000a; Prahalad & Hamel, 1990; Dekkers, 2000; Elliott & Torkko, 1996; Brandes et al., 1997; McIvor, 2000a; Sharma et al., 2009). Quinn (1999) suggests that those activities usually intellectually-based service activities or systems that the company performs better than any other enterprise are the core. In general, a function that is more core to the organization is less likely to be outsourced. According to Feeney et al. (2005), it is essential for companies selecting potential suppliers, to begin by assessing their requirements and the level of service they seek. Feeney et al. added, they then decide to either invest in fixing the existing function or establish a long term partnership. It is vital that client needs are matched by the supplier competencies in terms of operational service needs, service improvement needs and long term visibility needs. In other words, it is essential that the client’s rational to outsource is the supplier’s core competence. Subsequently, the results are often substantially impacted in the organization performance led by dissatisfied internal customers that will increase the costs and overall failure to achieve the desired result.