Business Process Outsourcing and Operational Performance Among Private Hospitals in Nairobi

Abstract

The private healthcare sector has made a remarkable contribution in the delivery of healthcare services in Kenya. Managing resources at today‟s hospitals systems is a challenge, considering the numerous clinical and business functions that need to be aligned for an organization to succeed. In these scenarios, it often makes sense for organizations to engage an outsourced services vendor partner to augment the business function, or handle it entirely. The study was conducted on business process outsourcing and operational performance among private hospitals in Nairobi. This study was set, to determine the extent to which business process outsourcing is employed by private hospitals in Nairobi, to establish the determinants of the business process outsourcing decision and to identify the challenges encountered by private hospitals in Nairobi while outsourcing its business processes. This research was conducted through cross sectional descriptive design. Primary data was collected through a questionnaire which was administered to 50 managers both senior and middle level at various hospitals in Nairobi. The data collected was sorted and coded then entered into the Statistical Package for Social Sciences. Mean and standard deviation was used to establish the extent to which business process outsourcing was employed and the determinants of the business process outsourcing decision among private hospitals in Nairobi. A multivariate regression model was used to analyse the relationship between business process outsourcing and operational performance. The study established the factors that private hospitals considered to determine services to be outsourced as being the need to reduce and control operating cost, improve focus of the hospital on core activities, gain access to world class capability, free resources for other purposes, accelerate re-engineering benefits, efficiently provide functions that are too complex to manage and to share risks. The study concludes that hospitals have been able to improve on operational performance through implementation of outsourcing strategy. Some of the benefits of outsourcing include enhancement of level of expertise at the hospitals, the hospitals are able to concentrate on core processes, risk sharing, reduction of operational and recruitment costs among others. Challenges of outsourcing highlighted from the study include risk of exposing confidential data, lack of client focus, conflict of interest, lack of management support and fear of loss of control. The study recommends that the hospitals should provide clear criterion for measuring the outcomes of the outsourcing process and ensure that the outsourced service provider focuses more on the satisfaction of clients.