Consciousness Raising Exercise #21

In an effort to save on transcription expenses, a consortium of hospitals decided to pool their bargaining power. Working with a medical practice management consultant, they entertained bids from the largest transcription agencies in the area. The agency that came in with the lowest bid got the contract for several large and lucrative hospital accounts.

Although Agency A's management bid successfully on the contract, Agency A did not have sufficient transcribing talent to meet its obligations. As a result, dictation which should have been transcribed within 24 hours was frequently five days late.

The head of the liver transplant service at one of the hospitals was appalled to discover that a two-page report contained 50 mistakes. When he protested to the hospital administrator about the poor quality of transcription, he was told that the hospital had locked itself into a contract for that price and it didn't matter how bad the reports were -- the hospital was bound to honor its contract with Agency A.

From the hospital administrator's standpoint, the lowest price per line was the driving factor behind the contract. Yet the hospital's risk management advisors might have felt otherwise -- had they understood how vulnerable the administrator's cost-cutting decision would leave them to medical malpractice lawsuits.

In an essay of 250 words or less, explain why the lowest possible rate can also guarantee a higher percentage of errors when outsourcing transcription services: