Outsourcing Public Health Laboratory Services: A Blueprint for Determining Whether to Privatize and How



In a continuing effort to reform and reinvent the way public organizations do business, the outsourcing of services has become a popular tool, particularly as resource constraints limit options available to governments. All too often, the decision is made, for reasons of ideology or resource constraints, to outsource services without giving careful consideration to the impact of privatization on the core missions of an agency, or whether privatization, in fact, offers real cost savings. Purchasing tools designed for traditional commodity purchases are often grossly unsuited for making decisions on specialized technical services.

This article suggests a process for the evaluation of an option to outsource laboratory services. It suggests that, prior to contracting or privatizing services, the concerned agency should evaluate:

the impact on the agency's core mission

the availability, stability, and reliability of private sector service providers

the relative costs of internal and external (public or private sector) service providers

the potential impact on regulatory enforcement

the ability to monitor the performance of external providers

potential conflicts of interest

Based on this model, the ongoing internal evaluation of services offers public agencies management tools to obtain the best value for the taxpayer dollar, not only in terms of the raw cost per test, but also in managing the quality of the services.