Social Policy & Administration, 2020:1-16
Julien Mercille and Nicholas O’Neill
The Digest Series presents summaries of papers that make contributions to policy debates that have already been published by the identified authors in cited outlets.
The growth of private for-profit home care providers has been an uneven process in Europe. It has underlined the need for more research on private providers to explain their growth and modes of operation. This paper looks at the Irish case which has seen an expansion in private providers and changed the nature of domiciliary care delivery. It is first shown that the amount of public funding received by private providers increased from €3 million in 2006 to €176 million in 2019. However, the amounts assigned to non-profit and public providers increased marginally. These funding trends are explained twofold: (i) by policy analysis and (ii) using in-depth semi-structured interviews (n = 12) with private home care providers and government officials central to the privatization of care process. Using the interviews in addition to a critical reading of interview materials, it is argued that the neoliberal nature of the Irish state has driven the growth of private provision particularly through policies of competitive tendering and fiscalization. Lobbying activities also played a role in this growth.
Since the 1990s diverse long-term care (LTC) marketization policies have supported the growth of for-profit home care providers in Europe (Anttonen & Meagher, 2013; Farris & Marchetti, 2017). These policies have included outsourcing, contracting out, cash-for-care and voucher programmes (Brennan, Cass, Himmelweit, & Szebehely, 2012; Carbonnier, 2015). The concept of neoliberalism is often highlighted to explain change in health and social care systems without identifying any explicit policies that may produce specific outcomes. It is the paucity of policy suggestions that this paper addresses.
Two main pathways of European marketization trends in LTC can be identified since the 1990s (Ranci & Pavolini, 2013; Ranci & Pavolini, 2015). The first pathway adopted a ‘residual LTC model’ and is evident in countries that have moved towards universalism by expanding the scope of coverage and resources assigned to care. Such countries include Germany, France, Spain, and Italy. The second pathway identified countries that already had established universal LTC systems, as in Scandinavia (Szebehely & Meagher, 2018) and England (Glendinning, 2012) but which changed direction towards a more ‘restricted universalism’ (Ranci & Pavolini, 2015).
Currently, private providers are represented by Home and Community Care Ireland (HCCI) which has more than 80 members employing a total of 14,000 carers. Industry sources estimate that approximately 75% of private providers’ revenue is obtained from public sources through the Health Service Executive (HSE) and 25% from out-of-pocket payments (Interviewee 7). Of the latter, a large number receive publicly funded home care and out-of-pocket payments can be subsidized by the state through tax allowances (fiscalization).
There are gaps in HSE data on the home care provider mix (private, non-profit and public). For-profit providers and non-profit organizations are not distinguishable. Additionally, for 2012–2017 (there are no readily available data before 2012), home care provision data are split into two categories that do not facilitate comparison: for home help services, it is the number of hours delivered that are compiled, but for home care packages, it is the number of recipients.
Data for the analysis was obtained in three ways. Firstly, comprehensive unpublished financial data were obtained from the HSE (Health Service Executive, 2019b) which allowed trends in private, non-profit and public home care since 2006 to be established. Secondly, in-depth semi-structured interviews (n=12) were conducted with key individuals central to the development of the commercial home care industry since the mid-2000s. Ten were senior personnel in the private home care industry, and two were government officials with broad experience in older persons policy. A critical analysis of these interviewees’ perceptions provides explanations for the growth of private providers. Thirdly, a documentary analysis of key policies which contributed to understanding the trends identified above was undertaken. This included official documents such as expenditure reviews, expert policy reports, policy submissions and parliamentary sessions. Its purpose was to explain the policies that have supported the expansion of the private sector and the related decline of expenditure on non-profit organizations and HSE direct services.
Trends in Growth of Private Providers in Ireland
Table 1 Annual home care expenditure (current € millions) by scheme, 2006-2019
In Table 1 the expansion of the home care package scheme, in which private providers operate can be highlighted against the static nature of home help services (delivered by non-profit organizations and the HSE).
Table 2 Annual home care expenditure (current € millions) by type of provider, 2006-2019
Table 2 shows total public expenditure on home care by type of provider for 2006–2019. Private providers have seen a significant increase in the amount of public funding they have received since 2006 whilst public expenditure on non-profit organizations and HSE provision has increased slightly reflecting the expansion of the home care package scheme.
Figure 1 Annual public expenditure on home care by type of provider, 2006-2019
Figure 1, which is based on Table 2, shows that funding allocated to private providers increased from €3 million in 2006 to €176 million by 2019 whilst that for public provision declined until 2017 levelling off at €184 million. Figure 1 suggests that the growth of the private sector has come at the expense of public delivery in care.
Explaining the growth of private providers
Private care providers follow two models of operation, franchise or company owned. Amongst the leading firms, the franchise model is the most widespread although some adopt a company-owned model. Franchisees can easily access brand recognition, industry knowledge and launch a home care business without significant input. Franchises owned by local individuals who are members of the community are perceived to be at an advantage over nationally uniform business models. Additionally, there is a large number of smaller, family-owned private providers that usually operate within a location or region. Supporters of the franchise model feel it is suited to home care because it is intrinsically a local business. However, interviewees managing company-owned businesses noted that their model allows them to centralize their operations, maintaining the nature and quality of services more effectively whilst being economically prudent.
Three key aspects of government policy have provided a supportive environment in which private providers and HCCI have grown. First, although the Irish state traditionally adopted a laissez-faire approach to home care it has moved in recent decades from relying on non-profit organizations to commercial companies to deliver care. It was a process mentioned by several interviewees. The austerity years that followed the 2008 global financial crisis provided a suitable environment for private care providers to expand.
Second, policies on competitive tendering and tax allowances additionally facilitated the directing of more publicly- and privately-funded work towards private providers. Since 2012 the HSE has placed care providers successful in the tender process on an ‘approved list’ and subsequently commissions care work from them. Inherent in this policy shift were two key neoliberal processes. First, tendering moves the state away from providing care publicly, channelling public resources towards private providers instead. Secondly it extended the marketization of home care. Competitive tendering and commissioning have benefitted the large for-profit providers over both smaller private companies and non-profit organizations. Non-profits have been forced to become ‘more business-like’ but have found it difficult to compete against larger companies with more financial resources. Non-profit organizations and local family-owned businesses have found it a challenge to meet new administrative requirements. Overall, the marketization process has allowed commercial providers to grow at the expense of those in the non-profit sector.
Fiscalization (Tax Allowance)
Third, a feature of neoliberal regimes are taxation systems favourable to businesses. A tax allowance for the employment of a carer was introduced in 2002 (Barry & Conlon, 2010, p. 25) and supported the growth of private providers in the ‘private pay’ market. This can be claimed at the highest marginal income tax rate of 40% in Ireland. Prior to 2014, the maximum amount for tax relief was €50,000, this was increased to €75,000 in 2015. It is estimated that the amount of tax forgone by the government due to tax relief available for privately delivered home care is approximately €48 million per year (Care Alliance Ireland, 2016). This subsidy is significant when compared to the approximately €400 million yearly public expenditure on home care (see Table 1).
A recent development in the arena is the consumer-directed home care scheme (CDHC). It provides individuals with state vouchers which they can use to purchase care from providers in the market. Although promoting choice in home care services CDHC utilization remains underused and the HSE has not rolled out the scheme to any significant extent. Interviewees noted their disappointment as they ‘advocated very hard for’ it (Interviewee 8). Interviews with private providers highlighted their support for expanding marketization through CDHC or some kind of ‘personal budgets’ for clients. Although it is argued that the Irish neoliberal state has significantly supported the interests of private providers, it can be seen that state support is neither automatic nor uniform. As such there are limits to private providers’ capacity to influence policy.
Patterns of the private home care industry’s growth and modes of operation in Europe remain under-researched. It is argued that specific neoliberal policies have contributed to private sector growth, ranging from public sector restraint to deliver home care and a change by the state towards supporting private companies, provision of tax allowances and competitive tendering. These made it possible for the industry to grow and organize itself through HCCI to lobby more effectively to promote commercial interests. Overall, the Irish experience can be summarized as having shifted from relying on religious and/or non-profit organizations to commercial bodies to deliver home care. The Irish experience is most relevant to other family-based systems, in particular, Southern European countries.
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