Download Outsourcing Medical Technology

Outsourcing Medical
Technology
John D. Cacciamani MD., MBA.
Temple University Health System
Concurrent Session I
March 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 Outsourcing
Data Center Management
Remote Hosting
Call Centers
Other Technology
“Outsourcing”
Large Software Acquisitions
Clinical Information Systems
Radiology Services (Night Hawk’s)
Medical Device Management
Market Drivers
Need to Improve IT in Health Care
Poor Investment Over Past Decade
Limited Capital
Improve Safety (IOM and Leap Frog)
Software
Hardware
Government Pressure
Potential Advantages of
Outsourcing
Improved Performance
Reduced Costs
Reduced Staff
Less Oversight
Easy access to difficult to acquire
expertise
Risk
Consequence of total failure?
Overcharges
Loss of control
Underperformance
Loss of customer good will
Strategic Advantage
Core Business?
Key functions which lead to market
advantage
Consumer Driven Health Care Initiatives
Improved Clinical Care
Strategic service functions that are dependent
on technology
Customer Relationship Management
Patients
Physicians
Physicians as Customers
CPOE Adoption Issues
Consequences of Failure
Loss IT investment
Loss of Revenue
Value Proposition
Core Competency vs. Extraneous
Inefficiencies
Questions
Where does the task at had fit into this
continuum
Do we truly understand value?
Time to reevaluate corporate focus, product,
and sources of strategic advantage
Needs Analysis
Process Audit
Benchmark Current Operations
Value Exercise
Current Deficiency Analysis
Expected Departmental Changes
Need for Internal Monitoring/Interface
after Outsourcing
ROI
Additional Considerations
SWOT Analysis
Stake Holder Mapping
Matrix
Strategic
Non-Strategic
Strategic Competence Non-Strategic
Competence
Competence
Don’t Outsource!
Can but Need?
New Opportunity?
Strategic
Incompetence
Non-Strategic
Incompetence
Don’t Outsource!
FIX
Outsource!
Clemmons, Hitt; Jan., 1997
Incompetence
Outsourcing Companies
History
Due Diligence
Economic Viability
Legal Analysis
Demo: Operational or Dummy
Confidence and Trust
Other Options
Portfolio Method of Risk Management
Two Outsourcers
Partial Internal Overlap
Duplication of Services Over
Implementation Period
Insurance?
Buy or Partner with the Outsourcer or
Control its Key Assets
Contracts
Line item expectations are difficult
Provisions for changes
Need an expert lawyer team
Damages for losses
Time
Services
Additional gain for value added services
Contracts
Exit Strategies Defined
Data Ownership
Source Code Ownership
Timeliness
Actual methods of dispute defined
Arbitration vs. Litigation
Contracts
Clearly Defined Payment Schedule
Oversight Expectations
Clearly Defined License Fees
Negotiate a “Third Party Source Code
Escrow Agreement”
Hold up top date Code
Disclosed with failure to perform/bankruptcy
Contracting Pit Falls
Poaching
Shirking
Contract Renegotiation
Poaching
Vendor attempts to extract value
without explicit permission
Selling Data
Trending data and supplying it to competitors
Analyzing data and selling it to companies in other markets
Similar Service or Products
Entirely Different Companies
Actual use of data to take their market
Shirking
Not Performing Tasks Adequately
Actual Service
Updating Code
Servicing Equipment
Contract Renegotiation
Once Operational Vendor asks for More
Uses Control as Leverage
Down Time
Data Possession
Customer Relations
Etc.
Conclusion
Process Fraught with Danger
Know what you NEED
Know what you can’t afford to LOOSE
The Contract can Make or Break the Deal
Portfolio Risk Management is Essential