Much outsourcing of public sector work has been driven, we would suggest, mainly by a desire to cut costs. There are certainly some cases where specialist services have been required and the private sector is better placed to provide the required expertise, and the public sector simply does not have it and is not likely to be able to obtain those skills. But in the main, cost reduction has been the central aim – with the savings coming from private sector staff being paid less than their public sector equivalents, or (in theory ) because the private sector can drive more efficiency.
But there has been very little objective review of the results of outsourcing that we have seen. It has been more of a philosophical or political decision, in some sense, even if it was justified by an objective-sounding business case.
So it is interesting to see the results of an academic study of out-sourcing cleaning services in the UK’s healthcare sector. Dr Shimaa Elkomy and her colleagues at the University of Surrey, Department of Healthcare Management & Policy, carried out a study focusing on acute hospitals in 2011 and 2012 and the effects of out-sourcing cleaning services on microbiological and non-microbiological cleaning standards. European Hospital website reported.
The study was divided into a theoretical review of previous empirical papers and an empirical section. The study, involving 167 UK acute National Health Service (NHS) hospital trusts, had to eliminate 27 due to their mixed cleaning modes, so it worked with 140 acute hospitals. In 2011, 37% of acute NHS trusts were out-sourcing their cleaning services, while 60% depend on in-house teams.
As well as looking at the cleaning quality standards, the team also looked at whether the hospitals that are contracting out are cost-efficient and exhibit high labour productivity compared to hospitals with in-house cleaning teams. But starting with the quality aspect:
Basically the results show that contracting out is not attaining the aimed for exposed quality performance,’ Dr Elkomy points out. ‘The empirical findings support the quality shading hypothesis examined by previous literature. Using different microbiological criteria, based on visual assessment of patients, our results show that hospitals that out-source display significantly lower cleaning standards of wards and bathrooms.’
In terms of microbial criteria, out-sourcing is significantly associated with higher levels of MRSA rates. These results imply that contracted service providers cannot effectively apply the optimum methods of cleaning and sterilisation and lack the required physical capitals and materials.
Perhaps more surprisingly, the cost savings of contracting out could also not be supported by the team’s work. The empirical findings showed that hospitals with out-sourced cleaning services have significantly higher costs and less labour productivity. “According to our preliminary results, out-sourcing hospitals have on average £474,000 higher costs compared to hospitals with in-house cleaning teams”.
This may need further verification if they are “preliminary results” of course, but this strikes us as very significant. We might have expected that outsourcing saved money but perhaps led to lower standards, but this suggests those Trusts that have outsourced have the worst of both worlds – they are paying more and getting poorer results.
Now insourcing (taking a service previously outsourced back in-house) is never easy. Skills have been lost, and there is a whole change process to go through, whatever the service. TUPE rules are likely to apply, and hospitals are cautious about taking on more staff. However, if the savings identified by Dr Elkomy stand up to scrutiny (and of course every organisation would have to look at their own specific case), then it must be worth considering for those hospitals who have outsourced cleaning. And this is a role that procurement teams and executives can and should be playing; taking a truly strategic view of key “make versus buy” decisions, like this one.
And in this case, there may be an option to save money, and save lives – not a bad result.