Managing strategic outsourcing in the healthcare industry.

Hospitals and healthcare systems are facing increased financial difficulties because of the Balanced Budget Act of 1997 and managed care. As a result, healthcare executives face the challenge of reducing costs while maintaining quality patient care. One of the strategic tools healthcare executives use to meet this challenge is outsourcing. Even though outsourcing has many benefits, outsourcing will fail if not managed successfully. Senior executives must choose outsourcing managers who have the necessary leadership capabilities. Managing outsourcing requires an understanding of outsourcing strategy, the benefits and risks of outsourcing, the evaluation process, and the methods to managing strategically. With appropriate management, strategic outsourcing should provide healthcare executives with a viable strategy for controlling costs and maintaining quality patient care.