Not lazy, efficient
Healthcare must be the only industry where an editorial can be written charging that overreliance on outsourcing is "lazy management" ("Over-the-top outsourcing," April 5, p. 19).
A hospital executive is charged with delivering the highest quality healthcare in the most cost-effective manner. These executives have a variety of management tools available to help them achieve this objective, including the use of outside organizations that provide administrative and clinical services. If, after analyzing the economics of these alternatives, an executive decides to outsource a function (to any degree) to the advantage of his or her institution, why does this make the executive lazy or incompetent? As mentioned in the accompanying article on outsourcing, would Boeing's executives be criticized for outsourcing virtually everything except the final assembly of the aircraft? I don't think so.
Chairman and chief executive officer
In defense of outsourcing
I found your special report, "Outsourcing everything" (April 5, p. 24) intriguing but would like to point out some very important issues that were largely overlooked.
One downside to outsourcing the article referenced is the displacement of local jobs, but in healthcare this is rarely the case. As with our company, a provider of pharmacy management services to acute-care and specialty hospitals, most if not all the people who work for outsourcing companies live in the local community.
This is very different from a manufac-turer shipping jobs overseas or south of the border.
Job cuts are also mentioned as a potential result of outsourcing. This may actually be the best argument for outsourcing. If services are improved and costs reduced, how can that be anything but positive? In today's environment these savings may mean the very survival of a hospital.
Technical expertise drives the need for outsourcing today. The article makes reference to this regarding information tech- nology. Consider also the regulatory and clinical areas. Firms that intently focus on one area are often more effective. For example, a typical hospital cannot afford the needed staff to effectively manage the clinical aspects of a pharmacy where the most dramatic patient-care, patient-safety and cost-reducing opportunities lie. Outsourcing provides stricter compliance, higher technical knowledge and lower costs, all of which are good for the patient, the hospital and the community.
Now consider the financial aspects of outsourcing by not-for-profit hospitals. The hospital reaps savings that can be reinvested for the benefit of the community.
The expense of operating the department is in the form of payment to a for-profit entity that pays taxes. The result is the community receives improved services from the hospital, and the state and federal governments receive tax revenue-a double positive.
Finally, we have found the most proactive administrators to be those who consider outsourcing because they push the hardest for excellence in operating and financial performance. Lazy administrators rarely take the time to consider the option of outsourcing.
President and chief executive officer
Comprehensive Pharmacy Services
Who de wonk?
Rarely in history have super health-policy wonks set themselves up for quantitative quality control as neatly as have Stuart Altman and David Shactman, on the one hand, and Jeff Goldsmith, on the other ("More beds for boomers," March 8, p. 32, and Letters, April 5, p. 21). Modern Healthcare should check seven years hence whose forecast was right and visit pain on the losing side.
If the Altman-Shactman team had it right and the number of hospital beds in the U.S. rose by at least 20% over the seven-year per-iod, Jeff Goldsmith should suffer the excruciating pain of giving a free lecture at Brandeis University. If the increase were less than 20%, Altman and Shactman should be made to suffer the equally excruciating pain by paying Jeff his usual speaker's fee.
So, let the better wonk(s) win.
James Madison Professor of Political Economy
Woodrow Wilson School of Public and International Affairs
Princeton (N.J.) University