Assessing Outsourcing Strategy on Quality and Performance of US Long-term Healthcare

Abstract

US healthcare executives face the continual challenge of reducing costs while maintaining quality patient care in an environment of continuous change. As such, outsourcing has become one of the strategic tools healthcare organizations use to control costs without adversely affecting patient care. This study uses transaction cost economic theory to argue that contractual relationships among firms arise from efficiency-seeking actions. This research reveals that a well-developed outsourcing strategy reduces operational costs and improves the quality of long-term care facilities. Furthermore, the results show that healthcare facilities can increase financial performance by building trust and relationships with outsourcing vendors.