outsourcing medical technology john d. cacciamani md., mba. temple university health system...
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Examples of Potential Outsourcing Business Process Outsourcing (BPO) Information Technology Outsourcing Data Center Management Remote Hosting Call CentersTRANSCRIPT
Outsourcing Medical Technology
John D. Cacciamani MD., MBA.Temple University Health SystemConcurrent Session IMarch 7, 2005
What is Outsourcing?Using an independent third party to provide services or infrastructure for a business with the anticipated gain of improved performance and/or reduced costs.
Examples of Potential Outsourcing
Business Process Outsourcing (BPO)Information Technology OutsourcingData Center Management Remote HostingCall Centers
Other Technology “Outsourcing”
Large Software AcquisitionsClinical Information Systems
Radiology Services (Night Hawk’s)Medical Device Management
Market DriversNeed to Improve IT in Health CarePoor Investment Over Past DecadeLimited CapitalImprove Safety (IOM and Leap Frog)
SoftwareHardware
Government Pressure
Potential Advantages of Outsourcing
Improved PerformanceReduced CostsReduced StaffLess OversightEasy access to difficult to acquire expertise
RiskConsequence of total failure?OverchargesLoss of controlUnderperformanceLoss of customer good will
Strategic AdvantageCore Business?Key functions which lead to market advantage
Consumer Driven Health Care InitiativesImproved Clinical Care
Strategic service functions that are dependent on technology
Customer Relationship ManagementPatientsPhysicians
Physicians as CustomersCPOE Adoption IssuesConsequences of Failure
Loss IT investmentLoss of Revenue
Value PropositionCore Competency vs. Extraneous Inefficiencies
QuestionsWhere does the task at had fit into this continuumDo we truly understand value?Time to reevaluate corporate focus, product, and sources of strategic advantage
Needs AnalysisProcess AuditBenchmark Current OperationsValue ExerciseCurrent Deficiency AnalysisExpected Departmental ChangesNeed for Internal Monitoring/Interface after OutsourcingROI
Additional ConsiderationsSWOT AnalysisStake Holder Mapping
MatrixStrategic Non-Strategic
Strategic Competence
Don’t Outsource!
Non-Strategic Competence
Can but Need?New Opportunity?
Competence
Strategic Incompetence
Don’t Outsource!FIX
Non-Strategic Incompetence
Outsource!
Incompetence
Clemmons, Hitt; Jan., 1997
Outsourcing CompaniesHistoryDue DiligenceEconomic ViabilityLegal AnalysisDemo: Operational or Dummy Confidence and Trust
Other OptionsPortfolio Method of Risk Management
Two OutsourcersPartial Internal OverlapDuplication of Services Over Implementation PeriodInsurance?Buy or Partner with the Outsourcer or Control its Key Assets
ContractsLine item expectations are difficult Provisions for changesNeed an expert lawyer teamDamages for losses
TimeServices
Additional gain for value added services
ContractsExit Strategies Defined
Data OwnershipSource Code OwnershipTimeliness Actual methods of dispute defined
Arbitration vs. Litigation
ContractsClearly Defined Payment ScheduleOversight ExpectationsClearly Defined License FeesNegotiate a “Third Party Source Code Escrow Agreement”
Hold up top date CodeDisclosed with failure to perform/bankruptcy
Contracting Pit FallsPoachingShirkingContract Renegotiation
PoachingVendor attempts to extract value without explicit permission
Selling DataTrending data and supplying it to competitorsAnalyzing data and selling it to companies in other markets
Similar Service or ProductsEntirely Different Companies
Actual use of data to take their market
ShirkingNot Performing Tasks Adequately
Actual ServiceUpdating CodeServicing Equipment
Contract RenegotiationOnce Operational Vendor asks for MoreUses Control as Leverage
Down TimeData PossessionCustomer RelationsEtc.
Conclusion
Process Fraught with DangerKnow what you NEEDKnow what you can’t afford to LOOSEThe Contract can Make or Break the DealPortfolio Risk Management is Essential