January/February 2001Vol. 2, No. 1How Does Privatizing Human Services Affect Children?
How do children fare when human services are privatized? A series of three fact sheets from the National Association of Child Advocates examines this question.
In the first fact sheet, the authors discuss whether or not privatization of human services benefits from a competitive market. Typically, these advantages include greater efficiency at lower cost. However, without characteristics of a competitive market (many buyers and sellers, low market entry and exit barriers, sufficient information, homogeneous product), privatized human services are not cost efficient. The price vendors charge can actually be more than public administration. Furthermore, with long-term contracts, vendors can force out long term competition and in effect, retain a monopoly.
The second fact sheet analyzed the possibility of designing a contract for private services that would provide a financial incentive to provide good services. The authors observe that it would be difficult to pay a vendor for achieving the best outcome in placing children without careful oversight, since each case depends on a specific set of circumstances. A case study of child support services, where the desired outcome is the same for all families, showed little variation between public and private child support collection services.
In privatizating children's services, private vendors exhibited the following characteristics:
- Even with economic incentives, they do not necessarily perform better than public agencies.
- They pick and choose among cases based upon their estimate of likelihood of success.
- They charge different States different prices for the same services.
A third fact sheet provides a checklist of questions to assist policy makers and advocates in assessing privatization proposals for children's programs. These include considerations about cost; impact on services; impact on employees; and contracting, monitoring, and accountability.
Copies of the fact sheets are available online at:
Does privatization of human services provide the benefits of market competition? (http://www.voicesforamericaschildren.org/Content/ContentGroups/ Publications1/Voices_for_Americas_Children/Advocacy/ 20003/privmktcomp.pdf)
How will the contract shape performance? (http://www.voicesforamericaschildren.org/Content/ContentGroups/ Publications1/Voices_for_Americas_Children/Advocacy/20003 /privperform.pdf)
What should child advocates consider when they analyze a privatization proposal? (http://www.voicesforamericaschildren.org/Content/ContentGroups/ Publications1/Voices_for_Americas_Children/Advocacy/ 20003/privanalyze.pdf)
To order print copies, contact:
Lyn Elbi, Publications
National Association of Child Advocates
1522 K Street, NW
Washington, DC 20005-1202
Phone: 202-289-0777 x201