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AHDI Track

Outsourcing: What it Means and the Motivation Behind It

The decision to outsource should start with a sound business plan and a successful outsourcing process starts with a good contract.

out·source /'out?sôrs/ verb:
gerund or present participle: outsourcing
obtain (goods or a service) from an outside or foreign supplier, especially in place of an internal source.
"outsourcing components from other countries"
• contract (work) out or abroad.
"you may choose to outsource this function to another company or do it yourself"
synonyms: contract out, farm out, subcontract, delegate
"maintenance jobs are outsourced"

Outsourcing is a practice in which an individual or company performs tasks, provides services or manufactures products for another company -- functions that could have been or are done in-house. Outsourcing is typically used by companies to save costs. The term outsourcing often refers to offshore outsourcing, or the practice of exporting work outside the United States; however, there are instances where work or services are outsourced but performed within the United States, and that is often referred to as onshore outsourcing or domestic outsourcing.

The motivations to outsource come from many places and are as varied as the companies pursuing the solution. Most organizations that outsource are doing so with the goal of achieving many associated benefits. Main driving factors that prompt organizations to outsource include cost savings, a focus on core competencies, access to leading-edge technological advances, access to specialized expertise, improvement in the delivery and quality of services and/or a solution to resolving organizational politics. Outsourcing

Outsourcing is most commonly used for information technology services and human resources. In healthcare and health information management specifically, outsourcing has become common practice for coding, release of information and transcription. These decisions are often made at a high management level and may or may not have been supported by the management staff that now finds themselves in charge of the transition.

Transitions often include displacement of current staff, a change in how the work is processed, management of a barrage of complaints from providers that don't understand a change happened, etc. How one handles the transition can have a large impact on the business relationship, but also on one's individual future success.

SEE ALSO: Leveraging a Business Intelligence Solution

Managers and supervisors have a big task ahead to steward the transition and help your staff navigate these new waters. The following are a few guidelines to keep in mind.

Accept the Decision
Once a decision has been made and a contract signed, the manager in charge of the transition must be on board. It's OK to disagree with the decision as long as you can move forward to now support the change and transition and foster the new relationship.

Create a Partnership
Realize you now manage a relationship with a vendor and you both want success. A crucial factor often overlooked by management is that, by nature, outsourcing trades the problems associated with managing a specific service with your own staff to one managing alliances with an external partner. The problems are not alleviated, but they may change. The contacts and relationships need to be continuously managed to ensure productivity and efficiency in reaching an organization's outsourcing goals.

Seek to Find Resolution
Differences in culture and operating styles between two organizations are likely to emerge as the collaboration evolves. Success depends on being able to identify such differences quickly and being able to resolve them effectively.

Follow a Governance Strategy
Governance is a formal management framework and structure that enables vendors and organizations to mutually manage the relationship, expectations, contractual dependencies and services. The most successful relationships have regular client-vendor meetings and also have designated managers on each side and at several levels to keep watch over the relationship. Regular meetings with the vendor provide a critical opportunity to clearly express priorities, review what is working and what is not working, identify continuous improvement initiatives and set objectives for both organizations aimed at attaining success.

In summary, the decision to outsource should start with a sound business plan, and a successful outsourcing process starts with a good contract. Realizing the true value of outsourcing will include the ability to plan and execute an effective transition, but the ability to form a partnership based on culture and values will determine long-term success.

Joyce Smith is manager of transcription/document integrity for Spectrum Health in Grand Rapids, Michigan. Joyce serves on the AHDI Managers/Supervisors Alliance and is an At-large Director on AHDI's National Leadership Board.

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