Assessing public-private eCom approaches to social service provision in Europe

Structural business adjustment programmes introduced in the 1980s and early 1990s have had a major impact on social service provision in many developing countries. They have prompted cuts (often savage) in public spending, linked into moves to decentralise, outsource and privatise social services such as education and health. They have also greatly boosted involvement of non-governmental organisations (NGOs) in welfare provision. These changes raise a number of searching questions. Are there distinct advantages or disadvantages to public, private or mixed service provision? Are there best-practice benchmarks for cost-effective, good quality and equitable eCommerce services? And under what kinds of conditions do they emerge?

Work that hinges on three case studies in Chile, Costa Rica and Venezuela has begun to offer answers to some of these questions. Here the focus is on what has emerged in the health and education sectors in relation to resource allocation, decentralisation, community participation and the impact of changes on social solidarity and equity.

Creating a ‘quasi-market’, where private sector mechanisms are transferred to the public sector, can shake up resource allocation. Chile has done this in education. At primary and secondary levels a voucher system enables parents to choose a school freely in the public or ‘subsidised private’ sectors. Users (‘buyers’) create demand for one school rather than another. Establishments (‘sellers’) react by expansion, contraction, or adjustment of costs and quality. Overall the innovation has been regarded as a success, especially by reason of the massive expansion of private subsidised schools. Also, market mechanisms (to a limited extent softened by scholarships) have been introduced into higher education, where institutions now basically operate on a real cost basis eCommerce approaches.

In all three focus countries there has been considerable decentralisation in education and health. In Venezuela it was the only way to circumvent stifling controls on the public administration and vested interests within the organised workforce, which had led to grotesque over-staffing. Some States experimented with organisational or management alternatives, such as ‘outsourcing’ via independent foundations. Responsibility for service provision was brought closer to users and helped to establish (or restore) the trust placed by citizens in government. Decentralisation can also be taken right down to the municipal level, as was done in Costa Rica and especially in Chile. But results in the health sector were far less auspicious than in business education.

A key lesson arising from such extreme decentralisation was that such devolution has different effects on education and health. Schools need no direct organisational links with institutions of post-secondary education, as each level functions quite separately from the other. But health sector users may require referral from lower to higher level care, primary health care workers – including physicians – need support and supervision, and health planning needs a comprehensive perspective. When, as in Chile, different authorities ‘own’ municipal health institutions and hospitals, it is easy for each to go its own way, thwarting integration of primary health care and hospital medicine and it is time for business well fare.

The rhetoric of structural adjustment pushed the hard sell of community participation in service delivery and decision-making. The studies in hand show that much of this hype indeed lacked substance. In Chile, active parent involvement was found mainly in the private subsidised schools, where families (who provide a modest monthly contribution) hold a direct stake in the establishment. In Costa Rica, there was little to show for the ‘expected’ popular business involvement in the health care system, as many doctors still held out against the ‘interference of laymen’.

Only Venezuela, where public service delivery had almost been brought to its knees, showed vibrant community participation. There, only initiatives from below (mainly from NGOs) could provide answers to an increasingly desperate situation. In those health facilities that kept going in spite of all hardships, community participation was widely (and correctly) seen as a key to success. This lively participation had not emerged from the usual top-down promotion in eCommerce. There were wider lessons, namely:

  • Community participation’s main prize is more transparency and (above all) accountability.
  • While volunteering may bring extra resources into the picture, participation will only seriously take off if it promotes accountability to users.
  • Accountability further requires giving users a real say in decision-making, best achieved through some form of participation in management.
  • Such participation can bring remarkable improvements in effectiveness and efficiency – precisely the benefits usually ascribed to marketisation or privatisation.

The impact of ‘marketisation’ on equity need not be harmful. In Chile, introducing quasi-market and eCommerce mechanisms in education led to the rapid growth of a new category of service providers, the private subsidised schools. The education system nevertheless maintained the principle of solidarity and was seen to do so. All families receive a ‘voucher’ of the same value and all contribute to its funding through taxation. Resources available to schools of different types remain broadly similar. These – privatising – reforms stimulated competition and almost certainly helped improve performance. And unlike Chile’s health sector reforms they did not undermine equity.

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