Caring about Business in the Care Business : How private elderly care providers can generate profit while maintaining care quality

University essay from Umeå universitet/Handelshögskolan vid Umeå universitet; Umeå universitet/Handelshögskolan vid Umeå universitet


The social service care system for the elderly has undergone a number of changes during the last decades. These reforms, especially the purchaser-provider split, have changed the role of the state in this sector somewhat, from being a monolithic provider of tax-financed elderly care to primarily being a purchaser who might choose to purchase elderly care services from private providers. However, the state has still retained a public elderly care service. Needless to say, the reform paved the way for a number of private enterprises in the area, causing competition between public and private providers. Adherents of the reform have argued that private providers can improve efficiency, while opponents have claimed that the chase for profit might affect the quality of the care in a negative way.

This study focused on the basis for this controversy by examining the relationship between factors such as profit, efficiency, care quality, incentives, motivation and productivity. The study was performed by interviewing thirteen employees and managers in four different care organizations (of which half were public and the other half private). Their answers were analyzed from three theoretical aspects; incentives and motivation, efficiency and productivity, and care quality.

The findings were that, since the revenue size is beyond their control, private providers can only create profits by reducing costs in a number of ways. Some of these ways, such as cutting down on education, team building activities and salaries, might be detrimental for the company in the long term (and thereby increase costs over time) and have adverse effects on quality. Others, however, such as increasing the efficiency of non-care activities (less administration and optimized scheduling, for example), avoid hiring overqualified staff and instead providing them with enough education for the task at hand, and optimizing work hours, might be more enduring over time and have none or small adverse effects on quality. More dispiritingly, it was also shown that the purchasers do not have any real knowledge about the quality of the work performed, regardless of the provider being private or public, and that in some municipalities users are denied to choose provider for themselves.

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