Extra steps needed for successful outsourcing relationships

Hiring an outside company as an outsourcing partner takes some management oversight, experts say. As providers explore different partnerships and outsourcing opportunities, they need to make sure the right protections are in place so that expectations are met, said Neil Olderman, a partner at law firm Drinker Biddle & Reath.

Many providers have shied away from outsourcing goods or services because they were deterred by a lack of control, a potential shift in corporate culture or worried they would be manipulated. But there are ways to get the collaboration and transparency from a business partner to deliver results without dispute, he said.

Tying vendor arrangements to certain metrics that include financial penalties if they aren’t met or conversely, bonuses, can drive better performance. There also should be a way to resolve internal problems quickly, such as requiring an on-site manager who has decisionmaking power, Olderman said.

Providers should appoint a watchdog with knowledge of the service or department to ensure things roll out smoothly, he said. One provision could require that the same vendor manager or point person remains even if there is restructuring or turnover at the company.

These relationships will become even more important as providers add and optimize outsourcing arrangements, Olderman said.

“Sometimes the way to improvement is capital investment that hospitals don’t have, and many are realizing that partners or vendors can bring a lot to the table,” he said.