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Issue 58 & 59 April-September 2011

Clipboard A Quarterly Update on Management Issues from the Administrators Section of the Christian Medical Association of India

Dear Members, Greetings from the Administrators Section of CMAI!


his issue of Clipboard deals with a very pertinent topic i.e. Outsourcing. In managing operations of a health care facility, whether or not to go for outsourcing becomes a crucial choice which leads to the success of the whole operation. Opting for outsourcing without due precaution could lead to sudden stoppage of some essential service in the hospital. Such an event would harm the reputation of the hospital apart from leading to huge revenue loses. On the contrary, refusing to outsource could lead to huge cash outflows because of high Human Resource (HR) costs. Hence the decision to outsource needs to be taken after careful thought and analysis. An attempt is made here to explore the applicability of outsourcing in health care delivery and give relevant inputs for those who would like to opt for outsourcing some of their services. There are three articles in this issue of Clipboard. 1. Outsourcing Mantra – will it work in health care delivery? : Stephen Victor 2.

Outsourcing – NABH Guidelines

: Neetu Singh


Managing Contract Labour

: D Samuel Abraham

Please send in you comments and suggestions to stephen.victor@

Stephen Victor Secretary, Administrators' Section

Biblespeak An Act of Courage


ehavebeenhearingthestoryofEsther since our Sunday School days. The Jews in Persia had been a minority. Haman having pride and a lust for power convinced the King to kill all the Jews. Esther had no rights and little access to the King. Having fasted and gathered support, she risked her life by coming before the King (Esther 4:1416.) Haman’s plan to wipe out the Jews was thwarted. Esther risked everything for God and won. Haman risked everything for an evil purpose and lost. The book of Esther assures us not to fear the schemes of men but rather be confident in God. Queen Esther made her decisions after careful thinking and not impulsive thinking. The opportunities we have are more important than the ones we wish we had. It is not enough to know that God is in control, we need to act with self-sacrifice and courage to follow God’s guidance. God has placed you in different locations, jobs and positions to understand His purpose, and for you to demonstrate wisdom by humbly standing against what is wrong. Remember, in God’s army you are ‘Never Alone.’ Ms Indira Kurapati Programme Coordinator, CMAI

Plant your seed in the morning and keep busy all afternoon, for you don’t know if profit will come from one activity or another — or maybe both. – Eccl 11:6 New Living Translation

Clipboard Issue 58 & 59

Outsourcing Mantra – will it work in Health Care Delivery?


Mr Stephen Victor

t appears that outsourcing is here to stay in the health care sector too. This is one of the topics of conversation frequently witnessed in board meetings, brainstorming and think tanks etc. This article explores the various dimensions of outsourcing and its applicability in health care delivery. At the outset, let us define outsourcing. According to Wikipedia, outsourcing means “transfer or delegation to an external service provider the operation and day-to-day management of a business process”. The outsource blog defines outsourcing as “acquiring a product or service rather than producing it yourself”. Outsourcing can be defined as a process in which a company delegates some of its in-house operations / processes to a third party for a significant period of time. Thus outsourcing is a contracting transaction through which one company purchases services from another while keeping ownership and ultimate responsibility for the underlying processes. Questions related to outsourcing were posed to experts in their respective fields and their replies are consolidated in the following paragraphs.

Why is outsourcing needed in health care? Outsourcing is a viable business strategy because turning non-core functions over to external suppliers enables companies to leverage their resources, spread risks and concentrate on issues critical to survival and future growth. Such moves bring down fixed and working capital investment. Companies can therefore focus on their core business activities and share the risks. The use of third party logistics providers has grown dramatically over the last several years and has increasingly become an effective way to reduce costs. – Abhijit Banerjee, freelance writer

What to outsource? According to Dr (Col) S K P Matwankar, Director Operations, Sir Hiranandani Hospital and Research Centre, Mumbai, ideally hardware (equipment and machinery) should belong to the organisation. However, the following departments can be outsourced based on requirement:


a. Core services  Nursing (manpower)  Diagnostic services (facility and manpower)  Pharmacy (facility and manpower) b. Support services  Housekeeping (facility and manpower)  Security (manpower)  Ambulance services (facility and manpower)  Laundry (facility and manpower)  Kitchen (facility and manpower)  Maintenance engineering services (manpower)  Clerical and technical staff  Front office and reception staff  Accounts department staff  Technical staff for medical and non medical services

On what criteria should the hospital administration choose the agent for outsourcing? It is important to choose the right partner for outsourcing. Some of the parameters one should consider are reliability of the partner, experience, systems and processes, continuous efforts in upgrading, technical support and understanding of international standards. Documentary evidence of deliverables and other client recommendations should be high on the checklist for outsourcing. – Kumar Katra, General Manager – Marketing, Business Development and Healthcare, Radha Krishna Hospitality Services Ltd (RKHS)

What are the elements of good outsourcing practice? 1. Efficient coordination between multiple

departments: administration, finance, HR and legal departments 2. Proper control of the management and compliance functions of the outsourced agency 3. Compliance with all relevant laws and regulations 4. Privacy and confidentiality between the two parties 5. Flexibility to allow for future changes and development along with contingency plans

Clipboard Issue 58 & 59 6. C l e a r s t a n d a r d s f o r p e r f o r m a n c e a n d governance 7. A mechanism to address performance problems without necessarily terminating the contract 8. Effective reporting and audit procedures 9. Best practices to make it possible to maximise the benefit of outsourcing while maintaining quality and risk management functions, which still come under the control of the hospital board

 Flexible Capacity Management

Outsourcing mantra will indeed work in health care delivery and is a sensible way of maximising resource utilisation provided the above-mentioned points are well observed in practice.

 Management and Control Challenges

10. Clear termination and unwind provisions provide a clean exit; hospitals should preserve the right to terminate early and often

Pros and Cons of Outsourcing Outsourcing benefits: Outsourcing is a powerful business tool used by scores of health care facilities all over the world. Here’s a closer look at the advantages of outsourcing:  Financial Savings One of the chief reasons for outsourcing is lower operating costs leading to financial savings. Huge savings can be made by the cost difference in salaries, benefits, and operational expenses between the organisation and the outsourced agency. Indirect cost savings are often derived from the client’s ability to refocus on their core business and outsource secondary processes to a specialised external provider.  Expertise Outsourcing gives access to knowledge pools that is not available with the organisation inside. Instead of taking on the herculean task of building diagnostic facilities, you could, for instance, outsource this job to specialised agencies. In the old economy, big health care facilities had their own departments for every business requirement. In the modern economy, health care facilities go back to their core business and use a network of external partners to take care of the rest.  Availability In certain locations, it can be very hard to find certain specialists who are willing to join your health care facility. A good example is specialised laboratory investigations. Not many hospitals will be able to find and afford high-end investigations. Outsourcing provides a channel through which business can find readily available high-level expertise at affordable rates.

Outsourcing enables your health care facility to manage its capacity and staff. The task of hiring and managing lower level capacities is passed on to an external provider with whom you can work out a deal based on a clear set of stringent specifications. Outsourcing Drawbacks Outsourcing can provide considerable benefits to your health care facility. However, there are definitely a number of drawbacks that you need to be aware of in order to make a good assessment: Effectively managing the operation of a department within your own health care facility is challenging enough. Effectively controlling an external operation is difficult due to the limitations of geographical distance and lack of face-to-face communication. It would be difficult to supervise and verify the set standards.  Failure in Deliverables With external sources, you trust a third party to deliver a certain quantity / quality of deliverables. Should your provider fail to deliver, you are likely to suffer the consequences despite the Service Level Agreements (SLAs) you had in place. The ultimate responsibility in delivering relies on you. Hence you cannot escape being blamed for the failure in the outsourcing agency.  Exposure Outsourcing exposes a certain part of your business to a third party. Unless complete confidentiality is maintained (which is very difficult) you are likely to expose your health care facility to a breach of confidentiality, leakage of vital medical records and other vulnerabilities in your organisation.  Negative Reputation Outsourcing has gained a negative reputation and even though studies have proven otherwise, the general public opinion remains that outsourcing reduces quality health care delivery. Your employees, clients and partners might not appreciate the fact that you are outsourcing especially when it means that you are terminating a part of your services.  Health Care Facility Value The major risk of outsourcing is that you may not be building the value of your health care facility in terms of personnel, in-house knowledge and infrastructure. In this case, the value of an outsourcing agreement with a provider will be less effective than an internal department.


Clipboard Issue 58 & 59

Outsourcing – NABH Guidelines 


uality is one of the main buzzwords in the health care industry. NABH standards, evolved by the Quality Council of India, have helped a number of hospitals in improving not only their quality but also their profitability. Since the misuse of outsourcing has led to poor quality of health care, the creators of NABH standards have made the effort to include outsourcing in their guidelines. Let us look at details of the various standard elements related to outsourcing and their interpretations.

1. Access, Assessment and continuity of Care (AAC) AAC.7.f. Laboratory tests not available in the organisation are outsourced to organisation(s) based on their quality assurance system AAC.10.g. I maging tests not available in the organisation are outsourced to organisation(s) based on their quality assurance system


HCO has documented the procedure for outsourcing tests / diagnostics for which it has no facilities and should include the following:  List of tests / diagnostics for outsourcing  Identification of personnel in the outsourced facilities to ensure safe transportation of specimens and

Ms Neetu Singh

completing of tests / imaging results as per requirements of the patient concerned and receipt of results at HCO  A methodology to check the performance of service rendered by the outsourced laboratory / imaging facility as per the requirements of the HCO  MOU with terms and conditions with an accredited lab

2. Hospital Infection Control (HIC) HIC.2.f. Laundry and linen management processes are also included HIC.2.g. K i t c h e n s a n i t a t i o n a n d f o o d handlingissues are included in the manual HIC.3.f. Surveillance activities include monitoring the effectiveness of housekeeping services HIC.8.d. Bio-medical waste treatment facility is managed as per statutory provisions (if in-house) or outsourced to authorised contractor(s)


 The same shall be applicable even if this activity is outsourced  If outsourced, the organisation shall ensure that it establishes adequate controls to ensure infection control

CMAI announces XXVth Workshop on Hospital and Health Services Management at Don Bosco Provincial House, Bangalore from 30 January to 10 February 2012

We expect to enrol only 30 candidates. Registrations are accepted on first-come-first-served basis. Please contact Mr Stephen Victor, for further details. 4

Clipboard Issue 58 & 59

Managing Contract Labour


 Mr D Samuel Abraham

he word ‘contract’ is derived from the word ‘consensus’. In short, to have a valid contract between two or more parties, there must be consensus of mind among them. In other words, the subject of contract must be understood by the second party the same way as the first party has understood it. As applicable for purchase of physical goods, can ‘service of labour’ be hired? If so, on what basis or regulation? In this century of ‘knowledge’ and ‘rights’, especially in a democratic country like India, what are the reasonable restrictions placed on the service of labour? To answer this, the Indian Parliament enacted The Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter called Act), which was notified in 1971.

Necessity of Contract Labour

The subject of contract labour is not new to Indian society. It has been in existence since time immemorial. It is being followed in our day-to-day activities too. For example, you engage a mason to construct an extra bathroom in your house in direct employment on daily wage basis. He comes at 10 am, slowly takes his instrument, asks his assistant to mix the cement, sand and water – it will take considerable time – puts the wooden platform slowly and finally starts the work around 11 am. Then, he goes for coffee break followed by smoking time and resumes work at 12 noon. He works till 2 pm and then goes for lunch followed by small chit-chatting with his fellow men followed by a nap. He resumes work at 3 pm. The same drama is repeated till 5 or 5.30 pm. The output is poor. On the contrary, if the same work is given on contract, the same mason comes at your door at 7 am, works till 6.30 pm actively engaging his fellow workmen! The magic is that he may finish it within the shortest period of time by persuading others too, so that he can take the cash and look for more business. In the same way, in industry, the employers engage contractors to supply labourers for the following reasons: 1. No direct supervision is required by the principal employer 2. The job is completed within the shortest duration 3. Liability to pay the benefits to the workmen is lesser than direct employees 4. Employees can concentrate on the core issue or the very important assignment rather than concentrating on the subsidiary or non-core issues

However, as there were many cases of exploitation by the employers and in many instances, there were no real contracts with the contractors of labour but they existed only on paper, the Parliament decided to regulate the engagement of contract labourers and in some cases abolish the same. As the labour legislations are always enacted to the benefit of workers liberal interpretations were given by the judiciary. A careful reading of the Act reveals that if there is non-compliance with the provisions of the Act, penal provisions are provided under Section 22. In short, the law has provided the penalties for non-compliance. But, in many High Courts and in a few cases, in the Supreme Court, the judiciary discussed at length, “the consequential effect” and ordered regularisation of service with the principal employer with effect from the date the contract between the principal employer and labour contractor was declared camouflage or sham contract. This has happened both in public and private sectors. The following are a few cases of laws for the benefit of our readers:

1. (1960 (3) SCR 466) Standard-Vacuum Refining Company of India vs Its workmen and others The Supreme Court declared that if the job of a perennial nature is done by the contract labourers and a lower salary is being given to the contract labourers when compared to regular workmen, then the court can order regularisation of service of the contract workmen with the principal employer.

2. (1974 (1) SCC 596) Gammon India Limited and others vs Union of India and others The Supreme Court declared that the intention of the Parliament was to regulate the working conditions of the contract labour to ensure payment of wages and other essentials.

3. (1978 II LLJ 397) Hussain Bhai vs Alath Factory, Tezbilali Union A workman under the CLRA Act is also a workman


Clipboard Issue 58 & 59 under the Industrial Disputes Act. The contractor would be the employer of such person. The principal employer under the Act would be employer under the I D Act in certain circumstances.

4. (1992 AIR SC 457) Deenanath vs National Fertilizers Ltd Held: Neither the Act nor the rules framed by the Central Government provide that upon abolition of contract labour, the said labour would be directly absorbed by the principal employer. Hence, automatic absorption is not possible.

5. (1994 LLR 634 (SC) R K Panda vs Steel Authority of India Held: The primary object of the Act is to prevent exploitation of the contract labour by the contractor or the establishment. The Supreme Court ordered absorption of all the workmen, subject to a few conditions.

6. (1995 LLR 552) Gujarat Electricity Board, Thermal Power Station, Ukai, Gujarat vs Hind Mazdoor Sabha Held: Thermal Power in Gujarat – 1500 workers under contract – hailing from Adivasi community – contractors exploited the workers – worked 20 years and more – Supreme Court ordered absorption of most of the contract labourers by appointing a committee.

7. (1997 LLR 288) Air India Statutory Corporation vs United Labour Union Held: The writ petitions filed by the workmen of the contractor to abolish contract labour in sweeping, dusting, cleaning etc, was allowed by a single judge of the Bombay High Court, which was upheld by the Supreme Court by the three judges bench.

8. (1997 (7) SCC 59)

Food Corporation of India, Bombay and others vs Transport and Dock Workers Union and others

Held: If contract labour is abolished by the courts, automatic absorption of contract labour by the principal employer.


9. (2009 LLR 923 SC) Steel Authority of India Ltd vs National Union Water Front Workers (2001 LLN 135) Held: a) State can abolish any class of employment under contract labour b) State can do it only on the recommendation of the committee specially constituted for this purpose c) Air India judgment overruled d) No automatic absorption of contract labour on its prohibition or abolition e) When the adjudicator has held that contract as a camouflage, the contract workers will be automatically absorbed with the principal employer f) The contract workers already absorbed will not be affected g) Neither SC nor HC can declare a contract sham or valid; only the Industrial Tribunal can declare as it is the adjudicator before whom both the parties can prove their respective claim

Relief to the Employer

Being a judgment of a Five-Judge Bench (Constitutional), the employers can be very happy that: 1. it puts a full-stop for automatic absorption, in case the state prohibits or abolishes contract labour 2. the Supreme Court or High Court cannot prohibit the employment of contract labour 3. the Supreme Court or High Court shall not go into the genuineness or otherwise of a contract 4. this judgment may hold good unless it is over ruled by a Seven-Judge bench, which is a remote possibility

Limitation of the Right of the Employer

The judgment brought a few limitations to the rights of the employer; now he is duty-bound to conduct the case properly by submitting proper records to prove that the contract is genuine and valid. Now he stands before an Industrial Adjudicator, who is at par with a District Judge to declare the validity of his contract. If he fails to prove his case, the Adjudicator may order absorption of all the contract labour who were working immediately before the award. An appeal against the orders of the Tribunal about the decisions before the Single Judge of the High Court, Division Bench of the High Court, and Supreme Court to get more and more time is no more in practice. The Supreme Court has limited the writ jurisdiction both for the High Court and the Supreme Court. Therefore, the

Clipboard Issue 58 & 59 employers can escape from imminent danger if and only if they follow the provisions of the Act properly; the power to adjudicate and declare the contract has been entrusted fairly with a lower level judiciary; an employer should take conscious note of the procedure in CLRA Act, 1970.

How to Make a Valid Contract The following are very simple procedures which, if followed, can save an employer from the Industrial Tribunal.The principal employer should: 1. register his company name with the Inspector of Factories (Form I) 2. ensure that a license is granted to the contractor by the Inspector of Factories (Form VI) 3. ensure periodical renewal (Form VII) 4. intimation notice about commencement / completion of work (Form VI B) 5. maintain Registers of Contractors (Form XII) 6. ensure employment card is issued to all the contract employees by the contractor 7. send Annual Return about the contractors for the year ending December 31 (Form XXV) The principal employer should ensure that the contractor is maintaining registers like Muster Roll, Register of Wages, Register of Deductions, Register of Overtime, Register of Fines and Register of Advances. This is only paper work but if papers are maintained, the employer can easily prove that the contract is genuine and valid. Another fact to be underlined is that many employers think that if they have an agreement with a contractor of labour on valid stamp paper it is enough and valid. They are not at all correct, because unless they send all the relevant documents to the Inspector of Factories and maintain a few other records, a mere copy of an agreement will be considered a camouflage or a sham contract.

Characteristics of a Sham Contract

i. Presence of direct supervision of contract employees by the officers / employees of principal employer ii. Absence of documents to show that there is valid contract iii. Absence of registration by the principal employer or license by the contractor In short, it depends upon who pays the wages, for whose benefit the contract workmen work – whether to his employer (contractor) or to its principal employer; under whose supervision. The moment a contract worker is entrusted to work under an officer of the principal employer, the contract becomes camouflage. The principal employer, if he notices any irregularity or any allegation of contract worker, should address the issue again with contract labour to the contractor directly and should not take any disciplinary action. It may not be justified if a mention is not made about the latest case of law in the Madras Rubber Factory United Workers Union Vs The Chief Inspector of Factories, Chennai & Ors (2010 (3) LLN 359) wherein the Hon’ble High Court, Madras, dismissed nearly four writ petitions filed by the trade union only because the management of Madras Rubber Factory scrupulously followed the procedures and produced documents to the utmost satisfaction of the Inspector of Factories. The Inspector of Factories in his affidavit filed before the Court, said that he could not refuse to issue license in the absence of any law prohibiting it. From the foregoing discussions, the employers may easily understand the various advantages and benefits of employing contract labour but at the same time, they should do their paper work scrupulously to avoid unnecessary litigation.

NABH facilitation by CMAI

As quality in health care is vital to ensure better health care outcomes, CMAI has taken this initiative to offer technical support to member hospitals to prepare them for NABH accreditation. Services offered 1. Complete NABH facilitation 2. Gap analysis against NABH standards 3. Trainings to the core team members 4. Assistance in preparation of policy documents 5. Assistance in preparation of forms and formats to be used in the hospital 6. Onsite visits to gauge the preparation 7. Mock Audit

The cost charged by CMAI to member institutions is highly subsidised and is around 50% of the market rates. The complete NABH facilitation spans a period of one year. CMAI can also provide one or more of the above service separately. Please contact: Mr Stephen Victor Secretary, Administrators Section


Clipboard Issue 58 & 59



What is meant by medical negligence? How many types of medical negligence are there?

Excerpts from: Laws on Hospital Administration, Mr D Samuel Abraham

There are five kinds of negligence in the medical field. They are: 1. 2. 3. 4. 5.

Simple negligence Composite negligence Gross negligence Contributory negligence Criminal negligence

1. Simple negligence

If a health professional fails to adhere to one procedure out of a host of standard procedures, it is called simple negligence. For example, if after an operation, a patient is discharged from hospital without being intimated about a revisit date for post-operative check up, this medical negligence is classified as simple negligence. If simple negligence does not cause any injury to the patient, the medical doctor will be exonerated by a court.

2. Composite negligence

Composite negligence is negligence committed collectively by two or more health professionals in a hospital. For example, a doctor tells the nurse the name of a drug to be procured and administered to a patient. But the nurse takes down the name of a different drug and this wrong drug is administered to the patient resulting in adverse effects on him / her. This becomes a case of composite negligence. First, the doctor commits a mistake by giving the name of the drug to the nurse orally instead of writing it out. The nurse also makes the mistake of not noting down the name correctly. If she had any doubt, she should have clarified it with the doctor before administering the drug to the patient. In such cases, courts penalise both the doctor and the nurse individually because they are compositely responsible for the mistake committed by them.

3. Gross negligence

This is a type of negligence where a health professional does not follow the procedure that is in vogue in a particular


consequences of using such a needle he used the same, putting the patient at the risk of contracting HIV.

Clipboard hospital, but instead violates the entire procedure. In all likelihood, such gross negligence will cause injury to the patient and in such cases, a verdict of compensation is passed against the health care professional in favour of the patient. For example, while giving steam inhalation to a patient as per the doctor’s order, the nurse did not take adequate precaution. The Nelson’s inhaler was not placed in a stable position. The patient sustained a burn injury on his abdomen and left thigh with the spillage of boiling water.

4. Contributory negligence

This type of negligence is committed by the patient himself. He contributes to the adverse effects in his body by acting against medical advice. In short, the patient contributes to further complications in his body by not following the doctor’s instructions. For example, a doctor advises the patient not to take any seafood while being treated for skin rash because such food may affect healing. But the patient defies the doctor’s instruction and takes seafood which aggravates the skin disease the following day.

5. Criminal negligence

This type of negligence occurs when a health care professional, foreseeing that the method used in the service to the patient may cause injury to a patient, continues with the same method which subsequently causes injury. Hence, even though the foreseeability of the imminent danger was there, he / she was not mindful of the same. For example, a laboratory technician uses the needle used to collect blood sample from a HIV infected patient to draw blood for another patient for biochemical tests ordered by the doctor. Despite being aware of the

A CMAI publication focussing on issues related to hospital administration

Christian Medical Association of India Published by The General Secretary CMAI, Plot no. 2, A-3 Local Shopping Centre, Janakpuri New Delhi 110 058 Tel: (011) 2559 9991/2/3 E-mail: Website: CMAI Bangalore Office HVS Court, 3rd Floor 21 Cunningham Road Bangalore 560 052 Tel: (080) 2220 5464, 2220 5837 E-mail: Editorial Committee Dr Vijay Aruldas Dr Jeyakumar Daniel Mr Innocent Xess Sr Vijaya Mr Samuel NJ David Mr Edward David Dr CAK Yesudian Ms Jaya Philips Editor Mr Stephen Victor Editorial Coordinator Ms Jaya Philips Design & Production Susamma Mathew Printer: Bosco Society for Printing & Graphic Training

Clipboard April-September 2011  
Clipboard April-September 2011  

A Quarterly Update on Management Issues from the Administrators Section of the Christian Medical Association of India