Implementation of outsourcing strategy at the Nairobi Hospital, Kenya

Abstract

Outsourcing is a widely known compelling strategic management option several companies are adopting nowadays. From small to large scale establishments, they have been using it to continually maintain their stable status in today’s overly competitive market. Its emerging power as a business tool is undoubted. Outsourcing seems to have become the new trend in organizational strategy. In outsourcing, part of the organization’s production or service process is discontinued and transferred to another party, along with personnel and other resources. Effective implementation of strategy has become the goal of many organizations. However, in translating their grand plans into action, unacceptably high rates of failure have been reported among many companies. Organizations seem to have difficulties in implementing their strategies. Healthcare industries are operating under environment full of rising cost of healthcare, increased adoption of technology, prevalence of quality and performance-based reimbursement models, evolving physician-hospital -patient dynamics and increased competition which are forcing the healthcare industry to recast business and care delivery processes. The Nairobi Hospital is one of the best Hospitals in the Healthcare industry in Kenya. The Hospital has outsourced some of it noncore services which include cleaning services, gardening services, courier services and security services. The purpose of this research is to assess the implementation of outsourcing strategy at The Nairobi Hospital with an aim to investigate the effects of outsourcing on the hospital’s performance. This research was conducted through a case study. Primary data was collected using an interview guide which was administered to 10 Managers, both senior and middle levels, at The Nairobi Hospital. The qualitative data collected was analyzed using content analysis technique. The study established that the Nairobi Hospital Hospitals has been outsourcing services for more than three decades. The decision to outsource is typically developed at senior levels of corporate management at the Nairobi Hospital and is usually contemplated as part of a larger strategic initiative. The study established the factors that Nairobi Hospital consider when deterring services to be outsourced. The factors include the need to reduce and control operating cost, improve the focus of the hospital, gain access to world class capability, free resources for other purposes, when resources are not available internally, to accelerate re-engineering benefits, to efficiently provide functions that are too complex to manage and to share risks. The study established that organizational culture affect the relationship between the hospital and the service provider. Outsourcing enables the hospital to concentrate the core process rather than the supporting ones. The study concludes that Nairobi Hospital has been effective in has been effective in the formulation of an outsourcing strategy. The study concludes that the outsourcing strategy at the Nairobi Hospital has a number of benefits which improves the organizational performance. The study recommends that implementation of outsourcing strategy at the Nairobi Hospital can be enhanced by: Ensuring that the outsourced service provider focuses more on the satisfaction of clients. Providing clear criterion for measuring the outcomes of the outsourcing process. Formulating guidelines which ensures that outsourcing enhances the growth objectives in the hospital. The study recommends further study on the key success for implementation of outsourcing strategy in the Kenyan heath sector. The study will provide a sector-wide evaluation of measure that can enhance outsourcing of medical services