Markets for the elderly - Efficiency and bureaucracy in the home care sector -

Abstract: The public sector has in recent years been pushed in the direction of adopting a more market-oriented approach, i.e. New Public Management (NPM). This is done with the intention to increase efficiency, improve quality and reduce bureaucracy, as well as to distribute power to more actors, in this case private ones. In the home care sector municipalities have been compelled by government to change the ways they are conducting business and how they organize themselves. There are however, in academic literature, diverging thoughts on what efficiency gains (and possible costs) that can be expected of such organizational changes. One such NPM initiative is Lagen Om Valfrihetssystem (LOV) "The Swedish System for Freedom Act". This paper aims to increase the knowledge on what performance gains and/or costs are being associated with the introduction of LOV in three Swedish municipalities. These municipalities represent different stages of implementation of LOV. We find that implementation of LOV has led to increased transparency, control, and efficiency in some areas, but that it has also led to increased demands on administration. The municipalities with the furthest implementation of LOV also have the highest associated administrative costs. These organizational costs are more evident than the rather ambiguous results concerning efficiency. It is worth to mention that efficiency is hard to measure in the municipalities, due to lack of definitions and aggregated measurements. We also see that many of the benefits of a market-oriented approach can be obtained without actually implementing any initiative. This is because by just scrutinizing ones activities through the looking glass of a market-oriented view, there are lessons to be learned without the need to take on the transaction costs of actual implementation.