Background
According to Modern Healthcare's 27th Annual Outsourcing Survey in the USA, the number of outsourcing contracts for respondents continues to rise. The 20 largest outsourcing companies reported a combined number of 11,324 healthcare clients, which is up 10.6 percent from the previous year. Laundry jumped ahead of housekeeping as the top hospital department-management contract in this year's annual Outsourcing Survey, with a total of 4,443 contracts in 2004. Housekeeping contracts increased 8.7 percent to 3,270, while food service contracts increased 7.4 percent to 2,065 [
1]. Frost & Sullivan [
2] found that the European healthcare IT outsourcing market generated revenues of US$396.4 million in 2005 and estimates they will reach US$697.7 million in 2010. Outsourcing is contracting with another company or person to do a particular function while off-shoring simply means having the outsourced business functions done in another country. Off-shoring is another type of outsourcing. Off-shoring is one situation in which developing countries that are able to adopt standards, processes, and language of developed countries can benefit from the liberalization of the movement of goods and services [
3].
One of the strategic tools healthcare executives used to meet the cost-saving target is outsourcing. Even though outsourcing has many benefits, outsourcing will fail if not managed successfully. Hospital executives must choose outsourcing providers who hold the necessary leadership capabilities. Managing outsourcing requires an understanding of outsourcing strategy, the benefits and risks of outsourcing, the evaluation process, and the methods to managing outsourcing providers. With appropriate management, strategic outsourcing should provide healthcare executives with a viable strategy for controlling costs and maintaining quality patient care [
4‐
6]. The most outsourced functions in healthcare are information technology (29 percent), finance (20 percent), and support services (19 percent) [
7]. By outsourcing, hospitals can reap the benefits of medical device reprocessing without assuming additional staffing and compliance burdens. Outsourcing enables hospitals to implement a medical device reprocessing program quickly, with no capital investment and minimal effort [
8]. Before negotiating any outsourcing transaction, hospital executives should carefully analyze the legal and regulatory implications, which will vary according to the type of services and the vendor involved [
9].
Hodge [
10] estimated the average cost savings, after including 2% for the cost of the contracting process, to be around 6–12%. In some cases, lower bids may not mean additional savings for the outsourcer because sometimes the apparent cost of delivering a service may not represent actual cost. For example, savings from low – cost wages may not compensate for the costs incurred from turnover and quality problems that come from an inexperienced, poorly trained, and unstable workforce [
11,
12]. apparent cost means the cost can be seen in the income statement for buy the service or goods. Actual cost means the cost other than in the income statement such as buy a poor quality of goods or services will occurs other cost in aftersale service or fix the good.
Young [
13] stated that outsourcing resulted in increased staff morale, upgraded capital equipment and improved services [
13]. The outsourcing of pathology and dental technical services aimed to increase labor flexibility, thereby decreasing costs. The outsourcing of lawn mowing was simply to reduce costs. However, food services in hospitals were not outsourced because there was a lack of evidence that costs could be reduced.
However, not all of the outsourcing is beneficiary to hospitals. Negative perceptions about the contract management groups of emergency department outsourcing persist among some physicians [
14]. Also, the contracting out of the orderly/porter/courier service at Sir Charles Gairdner Hospital in Western Australia shows negative results. The result was poor in terms of cost, quality and externalities [
15]. Guy [
16] suggested that hospitals should be wary of common myths that can cause them to make missteps in developing clinical service outsourcing.
Contracting out also can be a relatively cost-effective way to cut 13–17% cost of the total prevention budget in Africa [
17]. Liu [
18] suggested that contracting-out has improved access to services.
Within the health sector and the Human Services Department, the Australian government instructed clinical and non-clinical areas to be market tested through benchmarking services against the private sector, with the possibility of outsourcing. These services included car parking, computing, laundry, engineering, cleaning, catering, medical imaging (radiology), pathology, pharmacy, allied health and general practice. Managers, when they choose between outsourcing, and internal servicing and production, would thus ideally base their decision on economic principles [
13].
The March 2003 severe acute respiratory syndrome (SARS) outbreak from China [
19] to Taiwan has had an obvious impact on local hospitals' outsourcing ability [
20]. Dr. Su [
21], Director of Center of Disease Control in Taiwan, ordered the shutdown of the outsourcing system due to the rapid transmission of the virus through hospitals by the carelessness of the housekeeping and laundry services during SARS break.
Objectives
This study explored outsourcing in Taiwanese hospitals, comparing the differences between them based on hospital ownership and accreditation level. This paper also assesses the degree of hospital satisfaction with the outsourcing of medical and non-medical items and conduct factor analysis on satisfaction factors.
Methods
Setting
The research samples are from the hospital data from Taiwan's 2005 to 2007 Department of Health qualifying lists of accreditation. According to Taiwan's system, the hospitals were accredited into three levels: medical center, region, and local. Facilities that are categorized as "medial centers" have more than 800 beds and are affiliated with a medical school.
Design
This research combined two kinds of methods: a questionnaire survey and the in-depth interview to CEOs of the two sample hospitals. For in-depth interview, one hospital is not-for-profit and located in central Taiwan, while the other is a public hospital located in Taipei. Two of the hospitals assessed were medical centers with more than 1000 general beds and they were well known on outsourcing in medical items as well as on the non medical items. The in-depth interview were to ask the hospital's situation about outsourcing, and the feeling include what they think about the outsourcing can get benefit to them and the advantage and disadvantage of it. The interview time lasted for continuously four hours. The questionnaires were mailed to all 17 medial centers and all 71 region hospitals, while the 77 local hospitals were chosen by stratified system sampling methods from 382 local hospitals. The sample medical centers have the bed number from 800 to 2500, region hospitals' size normally between 300 beds to 800 beds, and local hospitals are from 20 to 300 beds in Taiwan. The total sample size is 165, with 37 completed questionnaires returned; The returned samples in medical centers were 6/14 = 35.3%, in regional hospitals were 21/71 = 29.5%, and in local hospitals were 10/77 = 12.9%. We prudently analyzed the returning samples and find they were evenly spread across the north, central, and south region of Taiwan; therefore, we believe it can represent the Taiwan hospital system. However, the returned local hospital samples were few, the reason could be: this level of small hospitals always own and operate by physicians and his/her families, therefore, unwilling to fill this kind of academic questionnaire due to lack of manpower.
The returned questionnaires were analyzed with STATISTICA® 7.1 version. The Pearson chi-square, ML chi-square, paired t test, factor analysis and structure equation modeling (SEM) were used to get the statistical results.
Instruments
The full questionnaire was listed on Appendix (see Additional file 1) and the design combined the research of Kirchheimer, Shinkman, Martanegara, and Yigit [
1,
7,
22,
23]. The questionnaire used in this study was a semi-structured questionnaire, composed of five parts. The first part consists of the questions regarding the title and reasons to conducting this research. The second part is the hospital accreditation level, such as medical center, regional, or local; total hospital beds; and hospital type, such as public, private, or not-for-profit. The third part is the definition of outsourcing, and inquires whether the hospital outsources at 9 non-clinical items and 10 clinical items which categories revised from Yigit (2007) paper. The fourth part is the satisfaction scores, using Likert 5 scales to evaluate the outsourcing of medical and non-medical items. The fifth part is the hospital's comments or suggestions.
Validity
Content validity
Content validity of the questionnaire was further confirmed by 3 directors of medical doctor and 2 hospital management specialists. The validity was also verified by several literature reviews on the questionnaire, which include Kirchheimer, Shinkman, Martanegara, and Yigit [
1,
7,
22,
23].
Construct validity
An exploratory factor analysis was conducted on the non medical items and medical items satisfaction scores to further examine the dimensionality of the scale.
This program been proved from the ethical committee: Biomedical Research Center, CSMU, Taiwan within Document CSMU-BMRC-97-001.
Discussion
Compared with Shinkman's [
7] study, this study shows higher outsourcing percentage in information (48.6% vs. 29%). One of the reasons is that Taiwan's software industry is powerful and can provide strong support to hospitals. The other reason is that due to Taiwan's single payment system of National Health Insurance, software companies can almost uniformly copy software systems to contract hospitals with the quality and lower cost under today's open mainframe computer system.
The results of this research also showed that the outsourcing of common and medical waste is a very high percentage (94.6%). On the other hand, the outsourcing of nutrition, nursing, and pharmacy have a lower percentage (less than 3%). Hospitals, especially for public hospitals, can get benefits from outsourcing to revive the FTE and human resource limitation. These results are the same as the Robert, Quinn, Jennings, and Yang [
4‐
6,
13]. However, the drawbacks of regulations have limited the public hospitals to operate the outsourcing contracts. This result is somewhat like the Boardman [
15].
Compare with the Moschuris's [
29] study, this study showed the same in the main factors affecting outsourcing decision. However, this study have the lower scores in saving cost (SC) is unlike Moschuris's results.
According to results from Table
4 and the other results of this study, we suggest hospitals pay more attention to the service quality of non-medical, outsourced items. Hospitals must also maximize financial and human resources advantage by outsourcing services such as laundry facilities, gift stores, and information as often as possible. In general, hospitals have higher satisfaction scores in medical items than in non-medical items.
Although outsourcing should provide healthcare executives with a viable strategy for controlling costs, reduce administrative hassles, and maintaining quality patient care, hospitals should be wary of common myths that can cause them to make missteps in developing clinical service outsourcing arrangements [
16].
Limitations
This limitation of this study is that the practical value can be generalized only to the hospitals system similar with Taiwanese health care.
Competing interests
The authors declare that they have no competing interests.
Authors' contributions
CTH was responsible for primary data cleaning and analysis, JYP was responsible for primary study design, manuscript drafting, statistic and interpretation, and manuscript submission. HC served as a methodologic consultant, assisted with data analysis and interpretation, and participated in manuscript editing.