How Much Power Do Private Companies Have in Long-Term Care?

This blog is based on an article in the Journal of Social Policy by Julien Mercille and Nicholas O’Neill. Click here to access the article.

The covid-19 pandemic has focused attention on older people and long-term care. For example, nursing homes have been at the centre of pandemic measures to protect more vulnerable citizens. Home care is now considered by many to be an important alternative to reduce pressures on the hospital sector while allowing people to remain in the comfort of their house. 

However, long-term care systems have been privatised significantly in recent years, as private for-profit operators have grown in size and displaced public and non-profit providers. Thus, long-term care systems are increasingly commercialised. 

It is therefore important to understand the implications of relying on private companies to deliver essential care, and the ways in which they shape and influence long-term care policy and services.

Paradoxically, although many social policy scholars of long-term care have noted and documented the shift to more privatised long-term care systems, there have been few investigations of private firms themselves. What are their strategies? What are their preferences regarding long-term care policy? What influence do they have on national long-term care sectors?

Our article is motivated by those questions and assesses the power of private home care providers in Ireland. Ireland is a meaningful case study because its home care sector has been significantly privatised in recent years—today private companies deliver about 60% of home care hours in the country, whereas as recently as the mid-2000s they remained rather insignificant.

To conceptualise the power of private companies in long-term care, we introduce the literature on “business power” to the study of long-term care. The business power literature goes back decades and has identified three forms of power: (1) structural, which refers to the privileged position of business in a country’s political economy, which permits them to influence government; (2) instrumental, which refers to lobbying actions to shape policy, and (3) institutional, which refers to the entrenched presence of business in a sector that makes it difficult for other actors to ignore companies’ interests.

It turns out that in social policy, institutional power is often the most important type of power for business. This is because many companies to which social services delivery has been outsourced are not necessarily large corporations that have a disproportionate impact on the national economy. Rather, their power flows from the fact that so many services have been outsourced that it would be difficult for governments to reverse course and nationalise services, because the state has become so dependent on private actors to deliver nationwide services. Institutional power is therefore key to understanding the influence that companies have on social policy. Of course, lobbying is also important, but we argue that whatever effectiveness lobbying has is directly dependent on the size of the footprint that companies have in social service delivery—if it is large, their lobbying will go a long way, but if they only play a minor role in delivering a service, we shouldn’t expect that the government will listen to them consistently.

Our paper illustrates these theoretical arguments by examining the evolution of Irish home care over the last several decades. The overall trajectory moved from parallel provision of home care by the state and religious orders/non-profit organisations (until the early 2000s) to one whereby private companies displaced religious and non-profit organisations and took advantage of a restrained public sector to end up delivering the majority of home care today. 

Private providers have gained significant institutional power, because they simply cannot be ignored anymore as key actors in long-term care. They are dominated by several multinational operators (e.g., Home Instead, Bluebird, Comfort Keepers) and a large number of smaller, Irish-owned firms. The trend is toward consolidation, in other words, large companies have grown significantly in recent years.

Yet, we explore the limits to private providers’ power, which include: (1) geography: rural areas remain dominated by the public provider (Health Service Executive, HSE), because it is too expensive for private providers to operate in remote areas; (2) there are still many individuals in the public provider who wish to prevent more outsourcing and are working to boost public provision; (3) private providers are highly dependent on public funding, which provides the government with significant leverage; (4) private providers do not have a strong “exit threat”—their operations are based in Ireland and they could hardly threaten to leave to operate in another country if their requests are not met.

In summary, understanding the strategies and power of private companies in social policy is very important, given that outsourcing has been such a significant trend in Europe and Ireland in recent years. Much of the funding remains public, which gives a good amount of leverage to the state, however, because private companies’ footprint is so extensive, it is difficult to envision a drastic reversal whereby governments would actively intervene to displace private actors, which gives business a significant influence over long-term care policy. Finally, the framework we have presented based on the business power literature could be usefully mobilised to better conceptualise dynamics in social policy fields other than long-term care.

About the author

Julien Mercille is Associate Professor at University College Dublin.


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