Privatisation of elderly care: Differences in non-contractible quality

Abstract: The privatisation of social services has been a subject of debate in Sweden since the neo-liberalist reforms enabled it in the 1990s. The main topic of discussion is whether private providers save costs to an extent where it degrades quality in the pursuit of shareholder value. As social services are nonetheless heavily regulated, with intricate public procurement deals that govern the operation of the services, there should not be differences in contractible quality among private and public providers. It is therefore of interest to see whether there are differences in quality in non-contractible quality, such as perceived quality of the service. In this study we analyse data on resident reported quality from all Swedish nursing homes, and regress it on a dummy for private provision, and control for certain structural characteristics of the nursing homes and municipal differences. We arrive at the conclusion that there are indeed quality differences between publicly and privately provisioned nursing homes, in most cases to the detriment of privately provisioned nursing homes. Most of these differences concern resident reported staff quality, and this despite controlling for the number of staff per resident and staff education level. It is not within the scope of this study to dig further into what causes the lesser staff quality in privately provisioned nursing homes or to evaluate the cost-efficiency of privatisation.