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Child Welfare Privatization and Child Welfare: Can the two be efficiently reconciled?

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Private contracting for child protection is an old concept. As policy makers realized a century ago, it is difficult to harmonize the financial and operational goals of private providers with the aims of child welfare. The conundrum, in a nutshell, is that service through contract, regardless of design, imposes economic value on specific outcomes. And private contractors systematically respond to the incentives or risks in the contract: when the contract provides rewards for private firms to move children rapidly toward adoption, children are adopted (Blackstone et al. 2004; Unruh & Hodgkin 2004); when the payment arrangement penalizes private firms for cases where children remain in out-of-home care for extended periods, children rapidly return to their biological parents or to adoption (Meezan & McBeath 2003); when private firms are paid a fixed rate for foster-care placements, regardless of duration, children remain in temporary care (Zullo 2002). Clearly, the contract terms shape the behavior of private providers.

The consistency of this finding implies that private contractors make decisions regarding children that are based on their agencies financial interests, rather than what is best for the child. There is no easy way to avoid this tension. Formulas can be put in place that creates incentives to reduce the length of temporary child placements, but this potentially increases the risk of premature family reunification. Contract terms that reward adoption must, directly or indirectly, reward the rapid termination of parental rights. Either arrangement can endanger children or interfere with family reunification. Hence the contradiction between private contracting and child welfare: the unidirectional value arising from contract relations is inherently at odds with the polyvalent and humanitarian nature of social work. Arguably, the best system is not one that attaches economic rewards to specific case outcomes, but rather, one that gives child protection workers the skills and resources to make judgments on the behalf of children and their families. Achieving such an “incentive neutral” environment is simply easier when the service is delivered publicly.