Outsourcing and downsizing: Processes of workplace change in public health

Throughout the 1990s, public hospitals embarked on a range of benchmarking exercises for support services, often accompanied by downsizing and, in some cases, outsourcing. These support services included clinical areas such as, radiology, pharmacy and pathology, and nonclinical areas of catering and cleaning, engineering and environmental services. The impetus for this trend was the introduction of the Federal Governments National Competition Policy with its rationale that private sector pressures and competition would make the public sector more efficient.
Through a case study approach, this paper discusses this process at two public hospitals, the aim being to investigate the reasons for outsourcing, outsourcings interconnectedness with downsizing, and the implications at the workforce level. Workplace issues discussed include consultation between management, unions and employees, changes to employee numbers and work practices, maintenance of workplace conditions, implications for staff recruitment and retention, and the relative power of management and unions. It concludes that benchmarking, outsourcing and downsizing have all been used to bring about workplace change. Whilst the choice between processes may be dependent on management perception of the workplace environment, implications for the workplace from each process have been similar.