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Christopher Keane, ScD, John Marx, PhD, Edmund Ricci, PhD and Gerald Barron, MPH

Christopher Keane, Edmund Ricci, and John Marx are with the Graduate School of Public Health, University of Pittsburgh, Pittsburgh, Pa. John Marx is also with the Department of Sociology, University of Pittsburgh. Gerald Barron is with the Allegheny County Health Department, Pittsburgh, Pa.

Correspondence: Requests for reprints should be sent to Christopher Keane, ScD, 211 Parran Hall, 130 DeSoto St, Pittsburgh, PA 15261 (e-mail: crkcity{at}pitt.edu).

	ABSTRACT

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Objectives. This article presents nationally representative data on the effects of privatization on local health departments (LHDs).

Methods. A stratified representative national sample of 380 LHDs was drawn from a national list of 2488 departments. Telephone interviews were conducted with 347 LHD directors.

Results. One half of the directors of LHDs with privatized services reported that privatization helped the performance of core functions. Privatization often resulted in increased time needed for management and administration. More than a third of LHD directors reported concern about loss of control over the performance of privatized functions and services.

Conclusions. Privatization is part of a broader shift toward "managing" rather than directly providing public health services, yet privatization often reduces LHDs' control over the performance of services. (Am J Public Health. 2002;92:1178–1180)

	INTRODUCTION

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In a previously published national survey of privatization in local health departments (LHDs), we showed that 73% of all LHDs have privatized at least 1 service.¹ Advancing prior discussions of privatization,^2,3 we identified 2 types of contracting out: (1) contracting out to a private provider a service formerly performed directly by the LHD and (2) contracting out the performance of a new service from its inception. Both types raise questions about the effect of contracting out on a government agency's ability to retain organizational authority and control.

Many governmental organizations face ideological and financial pressures to privatize services.^2,4,5 Because privatization is enthusiastically endorsed,^4–10 government department directors might expect that it will improve their department's image and standing in the community. However, privatization often requires that more resources be devoted to overseeing contracts and monitoring performance.^2,11,12 Although contracting out has often been undertaken to sharpen the focus on core organizational functions,^2,4,13 there is concern that privatization will undermine the regulatory authority of governmental agencies.^2,9 In the context of these issues, this report explores the effects of privatization on the performance of the core public health functions of assessment, assurance, and policymaking¹⁴; on staffing; on the image of the department; and on changes in the time spent on management and administration.

	METHODS

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A prior report described our methods in detail.¹ Briefly, we drew a stratified random sample of 380 LHDs from the 2488 LHDs listed in the 1997 database of the National Association of County and City Health Officials. We completed interviews with 347 LHD respondents (91.3% response rate), either directors (95% of respondents) or persons closest to that position.

	RESULTS

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Impact of Privatization on Core Functions
Of directors whose departments privatized services, 50% claimed that privatization helped their department's performance of core functions. Such directors believed that by not directly providing certain services, their department could better focus on the core functions. For example, one director said that privatization "has freed us up to focus on these core functions rather than spending too much money and time on clinical care."

Another 38% either believed that privatization hindered performance of the core functions or were unsure of the effect. Many of these directors were concerned about the loss of control by LHDs over various aspects of the services (Table 1). One director stated that privatization hinders performance of core functions and "would erode the infrastructure of public health. If contracted, those who actually provide the services and do hands on work would not be able to participate as well in the assessment and assurance functions."

Effect of Privatization on the Image of the LHD
The majority (59%) of directors believed privatization improved their department's image; open-ended responses revealed that public, business, and foundation officials often look favorably on privatization. Almost a third of directors (30%) reported no change, often commenting that "Joe Public" is unaware of LHD operations.

Privatization and the Ability to Control Service Provision
A central theme in directors' discussions of the effects of privatization on core functions involved concerns about control over service provision. In addition, 36% reported loss of control as a negative outcome. Specifically, 27% of directors claimed that privatization resulted in some loss of control over functions and services and 14% found control more difficult. Open-ended explanations revealed that many directors felt it was easier to keep track of services provided in-house: privatization added another administrative layer, which made obtaining reliable information quickly more difficult. Some directors observed that although LHDs are held accountable for the performance of services, they have little control over contractors.

Loss of control over the provision of services is associated with spending increased time on administrative or managerial tasks (P < .005). Forty-six percent of directors who reported spending more time on administration or management mentioned some loss of control over, or difficulty in controlling, the performance of services. By contrast, loss of control is mentioned by 26% of those reporting no change in time devoted to managing and administering and by 35% of those reporting a decrease.

	DISCUSSION

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Health departments that privatized services were increasingly engaged in "managing" rather than directly providing public health services, especially those that privatized at least 2 services. The new management activities included monitoring, contract negotiations, and attending meetings with private sector boards or coalitions. However, half of all directors who spent more time on administration as a result of privatizing reported difficulty or problems in exercising control over service performance. Control problems included difficulty monitoring the performance of staff employed by private organizations, difficulty specifying quality indicators in contracts, scarcity of staff with adequate public health values and skills, problems obtaining timely medical information, problems coordinating services, and weakened enforcement mechanisms.

A large proportion of directors believed that privatization enhanced their LHD's performance of core functions. However, the findings of this study raise questions about how LHDs can exercise authority over core public health functions if they are losing control over service performance. The Institute of Medicine report The Future of Public Health stated that "carrying out the assurance function requires the exercise of authority. This is not a responsibility that can be delegated to the private sector."¹⁴ Privatization threatens an LHD's ability to carry out not only assurance but also policy making and assessment. For example, one respondent stated that privatization hindered policymaking by "relinquishing control over public health functions," thereby undermining the LHD's "authority, credibility and pull at the policy making table." Diminished control over data reporting could also impair an LHD's ability to carry out assessment. One director's experience was that privatization "hinders assessment" because "data reporting is bad, [with yet] one more channel for data to filter through."

Unlike the situation that has confronted clinical medicine, direct corporate managerial takeover of basic public health functions is improbable because there is little comparable opportunity for dramatic profit. LHDs are experiencing a different form of managerial incursion; namely, they are devoting more time and resources to managerial and administrative activities as they contract out services to private organizations.

	Acknowledgments

 
This research was funded by the Centers for Disease Control and Prevention through a cooperative agreement through the Association of Schools of Public Health.

We thank the National Association of City and County Health Officials for their support and advice. We also want to express our gratitude to the reviewers at the Journal for their careful reading and useful suggestions.

	Footnotes

 
C. Keane designed the study questions and methods, drafted the questionnaire, analyzed the data, designed and supervised data collection, and wrote the initial drafts of the article. J. Marx initially conceived of studying the privatization of public health, worked on the study design, revised the questionnaire, and revised the manuscript. E. Ricci secured initial funding and significantly edited the manuscript. G. Barron participated in pilot studies, enlisted the participation of health departments, and reviewed the study instrument and manuscript.

Peer Reviewed

Accepted for publication March 23, 2001.

	References

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1. Keane C, Marx J, Ricci E. Privatization and the scope of public health: a national survey of local health department directors. Am J Public Health. 2001;91:611–617.[Abstract]

2. Sclar E. You Don't Always Get What You Pay For: The Economics of Privatization. Ithaca, NY: Cornell University Press; 2000.

3. Halverson PK, Kaluzny AD, Mays GP, Richards TB. Privatizing health services: alternative models and emerging issues for public health and quality management. Qual Manag Health Care. 1997;5:1–18.

4. Osborne D, Gaebler T. Reinventing Government. New York, NY: Plume; 1993.

5. Poole RW. Cutting Back City Hall. New York, NY: Universe Books; 1980.

6. Friedman M, Friedman R. Free to Choose. New York, NY: Harcourt Brace Jovanovich; 1980.

7. Savas ES. Privatization: The Key to Better Government. Chatham, NJ: Chatham House Publishers; 1987.[Medline]

8. Fitzgerald R. When Government Goes Private: Successful Alternatives to Public Services. New York, NY: Universe Books; 1988.

9. Starr P. The new life of the liberal state: privatization and the restructuring of state–society relations. In: Ezra N. Suleiman EN, Waterbury J, eds. The Political Economy of Public Sector Reform and Privatization. San Francisco, Calif: Westview Press; 1990.

10. Sappington DE, Stiglitz J. Privatization, information and incentives. J Policy Anal Manage. 1987;6:567–582.

11. Ramanadham VV, ed. Privatization and After: Monitoring and Regulation. New York, NY: Routledge; 1994.

12. Belluck P. As more prisons go private, states seek tighter controls. New York Times. April 15, 1999:A1.

13. Wall S. Transformations in public health systems. Health Aff. 1998;17:65–89.[Medline]

14. Committee for the Study of the Future of Public Health, Institute of Medicine. The Future of Public Health. Washington, DC: National Academy Press, 1988.

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This Article Abstract Full Text (PDF) Submit a response Purchase Article View Shopping Cart Alert me when this article is cited Alert me when eLetters are posted Alert me if a correction is posted Services Similar articles in this journal Similar articles in PubMed Alert me to new issues of the journal Download to citation manager Citing Articles Citing Articles via HighWire Citing Articles via Google Scholar Google Scholar Articles by Keane, C. Articles by Barron, G. Search for Related Content PubMed PubMed Citation Articles by Keane, C. Articles by Barron, G. Related Collections Community Health Health Administration Health Policy