CHAPTER ONE

INTRODUCTION

1.1  Background to the Study

Outsourcing has become one of the most researched areas in management studies due to its rising profile as a management strategy for improving performance. According to the International Association of Outsourcing Professionals (IAOP), the global outsourcing industry is presently worth over $1 trillion annually with India capturing a lion share of the market (IAOP Global Outsourcing 100, 2011).

Outsourcing is a procurement option that involves the “contracting-out” of services that were previously performed in-house to an external service provider as a means of increasing organisational efficiency and effectiveness (Steane and Walker, 2000; Monczka et al., 2005). It is a strategy that many public sector agencies are embracing as a way of improving value for money in providing public services. The clamour for change in the ways public resources are managed is not of recent origin. Since the mid1980s, the so called vertical integration philosophy and service praxis of public administration have given way to the notion of a public service that should provide “value for money” (Kakabadse and Kakabadse, 2001). Thus, the current economic globalisation and competition as well as growing demand for accountability and improved personal and community service have pushed public organisations to devise innovative solutions to complex social problems by acting more like market driven enterprises. Findings from previous surveys (Kakabadse and Kakabadse, 2001) gave four main reasons for the growing popularity of outsourcing among public service organisations: to achieve best practice, to improve cost discipline skills of public service managers, to improve the quality of service, and to help managers focus more clearly on the core competences of the organisations.

The Millennium Development Goals (MDGs) adopted at the beginning of the new millennium in the year 2000 was a revolutionary attempt to tackle the magnitude of problems facing mankind. Such problems include but not exclusively war, genocide, racism, food insecurity, rising HIV and debt burden, increasing maternal and child mortality (Lee et al., 2004; Annan, 2006; Enabudoso et al., 2006). All of these have great health implications which underscores why 3 out of 8 goals, 8 out of 18 targets, and 18 out of 48 indicators relate directly to health (UN, 2000; WHO, 2007). Plausibly, this is because a healthy population and indeed work force are indispensable tools for rapid socio-economic and sustainable development of any nation (Ogaboh et al., 2010). Many countries have embraced the use of outsourcing as a way of providing public services for the public good particularly in the health sector.

In an effort to address the precarious and dismal situation in the health sector, Nigeria as a signatory to the United Nation’s (UN) millennium development goal on health has over the years adopted various health care reforms to achieve this goal. It included the establishment of the National Economic Empowerment and Development Strategy (NEEDS), the National Action Committee on Aids (NACA), the National Agency for Food and Drug Administration (NAFDAC), and of recent the National Health Insurance Scheme (NHIS) (Enabudoso et al., 2006). Despite these efforts, the provision of quality, accessible and affordable health care have continued to pose a daunting challenge (WHO, 2007a; Oba, 2008; Omoruan et al., 2009). On individual bases, several hospitals and health care institutions in the country have embraced 3 outsourcing in order to gain access to some of its perceived benefits as a strategy for improving service delivery. Some of the services outsourced include some of its specialist clinical services, non-clinical services and functions. A conspicuous component of the services outsourced in hospitals is the facilities management services. They are the services that support the core functions of hospitals. For instance, it is not about “the principles and practice of surgery operation” in a clinical theatre, but the provision of an “enabling environment for an efficient surgery operation”. These may include such services as cleaning of the surgery theatre, constant maintenance of the surgery equipment, and training of the personnel to handle the equipment.

Over the years, facilities management has grown from what was traditionally perceived to be mere managing of buildings or maintenance unit of an organization to the holistic reality of being woven into the core and support services of organizations (Price et al., 2011) making it one of the most outsourced components in particularly public sector organisations (Ikediashi et al., 2012a). In other words, the more developed view of facilities management is an integrated approach to management of building/infrastructure (product) and services of an organization in order to create an environment that supports the primary objectives of that organization (Nutt, 2004). In their contribution, Pitt and Tucker (2008) define facilities management as the integration and alignment of the non-core services, including those relating to premises, required to operate and maintain a business to fully support the core objectives of the organisation.

This study therefore finds out the effect of outsourcing in building facilities management services in Nigeria’s public hospitals as a way of ensuring sustainable resource management and healthcare delivery in the face of growing clamour for health institutions to deliver even when constrained by inadequate resources.

1.2  Statement of Problem

Recent health policy debates in both developed and developing nations have been triggered by a strong conviction that favours a trend towards privatisation, involving the introduction of market mechanisms within the public health system. This is attributable to several reasons. According to Mills and Broomberg (1998), there is an emergence of new trends in public sector management that supports the use of private sector mechanisms as a solution to many of the problems faced by public sectors in many countries of the world (Walsh, 1995; Moore, 1996). Secondly, there has been accumulating evidence of failure of health care systems worldwide to meet key objectives of efficiency, equity and responsiveness to users and communities (Birdsall and James, 1992; World Bank, 1993; Mills, 1995). Other factors adjudged to have influenced the use of outsourcing in health care delivery are growing demands for the extension of customer care and influence, and increasing tension between limited resources and increasing demands on health care systems (Robinson and Lee 1995; Mills and Broomberg, 1998). Additionally, health care institutions such as hospitals are outsourcing as a possible response to demands created by such factors as market pressures, requirement of managed care organisations, and its suitability for facilitating flexibility at a time when change seems to be the only constant (Edum-Fotwe et al., 2003; Moschuris and Kondylis, 2006).

This study notes however that even though outsourcing is one of the most researched areas in management studies, its impact on facilities management services provision in public hospital setting of a developing economy like Nigeria is largely unclear. This is because although a wide range of services are being outsourced in Nigeria’s health institutions notably hospitals in response to the emerging trends outlined above, there has been no comprehensive empirical based research reported in the literature to provide insights into such a relatively evolving and important concepts as outsourcing and facilities management in Nigeria’s public sector hospitals. This is surprising since available statistics indicate that there are more than 106, 0000 beds and over 13,000 public hospitals operating in Nigeria (Ademiluyi and Aluko-Arowolo, 2009) while the use of outsourcing is reported to have been stepped up as a result of government’s initiative to address problems bedevilling the public sector institutions generally. Specifically, there are plausible concerns that in trying to cope with distractions arising from gross shortage of personnel (WHO, 2007a), inadequate and outdated medical equipment (Yohesor, 2004; Johnson and Stoskopf, 2009), poor funding (WHO, 2007b), policy inconsistencies (Omoruan et al., 2009), Nigeria’s public hospitals are not adequately equipped with the necessary best practice mechanisms to guide them in making right decisions regarding outsourcing of services while taking into consideration the likely risks that may be associated with such outsourcing transactions.

This therefore underscores the need for this research which is to make facilities management services delivery sustainable in our hospitals. In specific terms, this study proposes to address this by first identifying the drivers of outsourcing and then conduct an empirical survey of facilities management services being outsourced in the hospitals. It then assesses users’ satisfaction of outsourced facilities management services in hospitals. The study then assesses the risks involved and uses the outcome of these 6 investigations to develop an integrated process model for outsourcing facilities management services provision in public hospitals.

1.3   Aim and Objectives

 The aim of the study is to develop and test an integrated framework for outsourcing facilities management services with a view towards improving facilities management services provision in public hospitals. The proposed framework integrates key constructs of decision support system and risk management tool into an amalgamated framework for outsourcing facilities management service provision. The research therefore aims to achieve the following specific objectives, namely to:

 1. determine a set of key factors that influence the decision to outsource facilities management services in public hospitals;

2. conduct an empirical survey of facilities management services outsourced in public hospitals;

3. assess the satisfaction of users of outsourced FM services and to model the satisfaction of users on quality of outsourced facilities management services.

 4. assess the probability and severity of risks associated with outsourcing of facilities management services in public hospitals.

5. use the outcome of the four objectives above to develop and test a process model for outsourcing facilities management services in public hospitals.

1.4 Research Questions

 The pertinent question for this study therefore is: What is the effect of outsourcing in facilities management in Nigeria? In order to address the above question, the research addresses the following sub-questions raised by the study:

 · What are the factors that influence the decision to outsource facilities management services?

· What are the facilities management services being outsourced by the public hospitals?

 · What are the critical risk factors that may be associated with outsourcing transactions in these hospitals?

 · What is the perception of users on the quality of services rendered by vendors in the hospitals?

 · What mechanism can best integrate decision support and risk management model for outsourcing facilities management services in the hospitals?

1.5  Significance of Study

this research will aid in developing a body of knowledge on outsourcing of facilities management services in Nigeria. This is based on the fact that most research to-date on outsourcing and facilities management focus primarily on the experiences of developed countries in Europe, United States and Asia. Furthermore, most of the current literature on the two concepts in Nigeria is preliminary and pedagogic in nature addressing issues such as definitions, scope and tools (Ojo, 2002; Opaluwa, 2005; Mbamali and Adebayo, 2006), while the literature on health services have been mainly about problems and challenges of health care delivery (Enaduboso et al., 2006; Ogaboh et al., 2010; Osazuwa-Peters, 2011; Abdulraheem et al., 2012).

The study gave an insight into the extent of application of facilities management principles and established the benefits and probable challenges against holistic adoption of facilities management principles.

e knowledge gathered from this research will immensely assist government and stakeholders alike in 8 the establishment and possible enactment of relevant laws, regulations and guidelines in the development of efficient framework for outsourcing and facilities management practice in Nigeria.

The study contained in this thesis contributes to practice by identifying factors associated with high levels of performance that stakeholders in health care should consider while making outsourcing decisions as regards facilities management services provision in hospitals. The study in addition points to the fact that risks exist in any relationship, formal or informal and in particular relationships between clients (public hospitals) and vendors (service providers).

1.6  Scope of the Study

The scope of this research is restricted to public hospitals within the south-south geo-political zone of Nigeria. The states are Akwa Ibom, Bayelsa, Cross River, Delta, Edo and Rivers. The scope has been restricted to the zone due to funding and time constraints. Nigeria is a large country covering 923,800 square kilometres with difficult terrains. A study of the whole country would have been very good but it requires a huge sum of money and a great deal of time schedules which in this case is not sufficient.

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