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Privatization success can be elusive

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Sunday, Oct 12, 2008 - 12:03:50 am CDT

Nebraskans have reason to be leery of the plan to privatize all foster care and other services for children who are wards of the state.

The record in other states that have taken the same step is mixed. And Nebraska’s record of overseeing contracts is less than stellar, as shown by the recent problems found in the state’s oversight of contracts for transporting children.

Privatization has potential; it also has pitfalls.

Under the proposal, the Department of Health and Human Services expects to contract with a few large agencies or networks to provide services for out-of-home care.

The private agencies would provide foster homes and group homes and coordinate services.

State employees would continue to conduct initial assessments of children when they enter the system and would monitor them while they are in the system.

State officials plan to select contractors by Feb. 1, to sign contracts by March 15 and to implement the change by July 1.

Nebraska has about 6,600 wards of the state for reasons including parental abuse and misbehavior by children. About 4,300 of these wards live in foster homes, group homes, treatment programs, detention centers or other institutions.

Florida privatized many of its child welfare duties almost a decade ago. A state audit in 2006 showed that costs rose almost 83 percent per child over the first six years of the reform. The audit also found that children suffered abuse at a higher rate.

In Kansas, which privatized foster care, adoption and related services in 1996, there have been periodic wrenching changes. In its early years, several contractors lost millions of dollars. Lutheran Social Services ended up going out of business. United Methodist Youthville burned through a $16 million endowment and went bankrupt. In 2005, the Kansas Children’s Service League lost its $15 million contract to provide foster care, and about 200 employees lost their jobs.

In Texas, one private agency managed to win renewal of its contract to provide foster care even though it had been cited for more than 100 safety violations. The contractor last year voluntarily gave up its contract after two children died in its foster homes.

Obviously, privatization is no magic solution for saving money or strengthening the child welfare system.

It’s somewhat reassuring that Nebraska officials plan to retain the critically important functions of making initial assessments and monitoring. The key to making privatization work lies in the state’s ability to provide effective, timely oversight.


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russell wrote on October 12, 2008 7:57 am:
" The driving force behind privatization is a cost savings or tax reduction. So where are the cost saving coming from in a business that is almost entirely labor? All business persons recognise wages have a direct relationship to employee capabilty (in my mind the exception is upper management wages).
From a business viewpoint the "raw material" and desired "finished product" will not change SO to lower total expenses wages have to reduced. without reducing quality. Recipe for disaster? "

 WCG wrote on October 12, 2008 8:08 am:
" I thought the headline referred to privatizing Social Security. Heh, heh. Aren't we all glad that the Republicans weren't able to pull THAT off? We'd be in an even worse mess right now, although it's hard to imagine how much worse things could be. (And Palin has been quoting Reagan's old rant about Medicare, how we were going to lose our 'freedoms' because of it, so I don't suppose we're out of the woods yet.)

Too often, privatization - in all parts of government - is pushed by faith-based political ideologues, without regard for evidence. There are places where it might work well, but others where it won't. I don't know enough about foster care to tell which it is, but I DO know that we need practical, rational, evidence-based thinking about such things. Incompetent, neo-conservative ideologues have nearly destroyed our country in the past eight years. Rational people need to take back our state and our country.

Before privatizing ANYTHING, set out our reasons (using evidence from other states) and our goals. And afterward, examine whether the results matched our expectations. If not, STOP GOING DOWN THE WRONG PATH. Accept that the experiment failed, turn around, and try something else. Only fanatics want to 'stay the course' with failed policies. And I hope we've had enough of fanatics the past eight years! "

 Agatha wrote on October 12, 2008 9:04 am:
" I am still not comfortable with privatization of the foster care systm. Privatization is a tool to reduces costs out of the budget and never really a move to improve someone's situation. The current foster care system suffers because the government continually refuses to hire more people at decent wages or better than decent wages. If the current system had more, better trained employees, children would be protected. "

 Bob wrote on October 12, 2008 10:23 am:
" Could someone please explain to me why a private, for profit, organization would be able to provide foster care better and/or cheaper than non-profit Nebraska State Government? There's something very wrong with that notion... "

 Re Bob wrote on October 12, 2008 5:48 pm:
" The government is sometime not the most efficient way of doing things. They have no competition and if they need more money they just ask the taxpayer.

A private place of business just can't charge whatever they want. They need to be competitive and usually identify inefficiencies better than government. A place for profit is more likely to reduce staff bacause they simply cant ask for more money like the state government can. "

 rac wrote on October 12, 2008 5:54 pm:
" Funny how some people are just fixated with "the last eight years". Like all their lives have revolved around what GW supposedly did or didn't do to them. I'm fixated on the next 4 years, and my plan for that doesn't include Obama and his leftist friends. Privatization can't apply to everything, but it should be obvious Government doesn't do a lot very well. "

 Ricky wrote on October 12, 2008 6:05 pm:
" "Government doesn't do a lot very well."

No kidding, just look at the last eight years... "

 Charles wrote on October 13, 2008 3:36 am:
" Unfortunately, this issue will receive very little sustained attention, and privatization of foster care will likely continue. Earlier comments in this thread are accurate -- "government doesn't do a lot very well." One of the things Nebraska state government does very poorly is oversee the conduct of private contractors providing human services. Having worked in human services for more than 30 years, I have seen first-hand how little oversight there is. The state devotes few resources to oversight, responds slowly when problems are uncovered (often by consumers who have been harmed, or by workers who just can't tolerate what they see happening to citizens harmed by service providers), and sometimes allows whistle blowers to suffer retaliation from unscrupulous providers. There are, of course, private providers who are genuinely competent, ethical, and dedicated to their work; but there are also private providers who will allow their clients to be harmed, exploit them for financial gain, even directly abuse them. The problem will be this: the state won't know the difference, and many foster children will be seriously harmed -- children in foster care are quite vulnerable, easy to victimize. Without oversight, the extent of harm done will likely remain hidden for years, during which time the state will congratulate itself for a successful transition to privatized care. Children will suffer unnecessarily. I guarantee it. Unless a serious, measurable, and probably expensive commitment is made to ensure close oversight, privatization of foster care is a decidedly bad idea. "

 The Real MarkyMark wrote on October 13, 2008 10:06 am:
" I'm glad you are focused on the next 4 years rac, can't blame you for that.

Personally though, it looks like you're fed up with government. You don't like the left, but it must be very heartbraking to you to finally realize that the right has NEVER been Conservative. My condolences. "

 George a union man wrote on October 14, 2008 9:24 am:
" I feel that I must chime in on this topic. I am a government employee and I have seen first hand how "Privatization" has worked and how it has not worked. There are some jobs that state government employees are not set up to do, ie: major road construction, major building construction ect. BUT there are several jobs that state employees are very good at, provided that those employes are given the proper tools with which to do their jobs. One of those tools is full staffing. I know that this means that the state would have to hire more employees which means that the cost for wages would go up, then the question is, is the expense worth it? And the answer would have to be YES! Foster Care is a program that has to be state ran, state controled and stae manned. Giving a private company control of a state function is not only a wrong move in protecting our children, but it is a wrong move in the use of our tax dollars. This is one of those functions that state employees can do best, as long as the employees are given the right tools. "

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