A One-page Report regarding Outsourcing Laboratory Service in CSI

Introduction

In recent years, many hospitals have embraced outsourcing of services as a potential cost-saving measure. With
outsourcing, an external contractor assumes responsibility for managing one or more of a healthcare organization’s
business, clinical, or hospitality services. This external contractor specializes in providing a specific service and can
achieve economies of scale, and may be able to provide a service more efficiently and less expensively than the healthcare
organization which allows the hospital management more time and energy to spend on marketing and other business core
operations.

The Pros and Cons of Outsourcing

Cost reduction, improvement in service quality levels, the use of the external provider’s infrastructure, the opportunity for
the healthcare organization to focus on its core business are amongst the tangible and intangible benefits of outsourcing.

The difficulties and/ or problems of outsourcing are the lack of coordination and integration between the healthcare
organization and the external contractor as well as the insufficient understanding of the external contractor about the
organization’s operations leading to miscommunication, and the loss of flexibility and control of the organization to its
services being outsourced.

Present Situation

At CSI, outsourcing began with nonmedical services such as food, laundry, janitorial, and security services and is
planning to include medical services such as dialysis, pharmacy, radiology, and clinical laboratory to name a few.

In present Laboratory Set-up, laboratory examinations that are not available to process in-house nor regulatory mandated
are being referred to our affiliated laboratories such as SIM Laboratory and Hi-Precision Diagnostics for Immuno-
Serology and Special Tests Examinations, MIDC for Microbiology Exams, and our histopathology specimens to our
pathologist, Dr. Azeus Silva.

A number of studies have recently presented the issue of clinical laboratory outsourcing. Such presentations provide
potential effects but very few provide a systematic assessment and analysis of outsourcing benefits or problems.
Furthermore, no study, to our knowledge, has specifically examined the costs of “make or outsource” decision
experiences making CSI to seek the service of Carillion to assist us in the decisions on which services should remain
within the organization and which should be outsourced, including its short and long-term cost-benefit analysis. Hence,
mistake in identifying core and noncore activities can lead our organization to outsource our competitive advantages.

Benchmarking with other Healthcare Organizations (Local and International)

To site few among other organizations that outsources their clinical laboratory according to type of management are:
1. Quest Diagnostics and LabCorp. - two of the largest private laboratories in the United States of America take full
management of Hospital Laboratory in which they replace or employ all hospital lab employees.
2. Metro Pacific group that has opened a centralized laboratory business that is housed in the its largest hospital Makati
Medical Center, in partnership or joint venture with Japanese firms, LSI Medience and Marubeni, Medi Linx Laboratory
Inc.
3. St. Lukes Medical Center and Asian Hospital and Medical Center send some of its special test to the outside provider.
This is also our current practice.

Prepared by:

Juliet R. Manaois
Laboratory Coordinator