07 May 2019 | Dr Shimaa Elkomy
The public-private outsourcing partnership in the UK is not achieving its potential, writes Dr Shimaa Elkomy.
Policymakers regard outsourcing as a magic wand that cuts public spending, reduces the burden on the public administration, promotes efficiency, and delivers competition gains, specialisation, high-powered profit incentives and private sector empowerment.
Public-private partnerships can improve service performance, particularly for labour-intensive public activities peripheral to the public body's core activity. However, this is not necessarily the case in the UK - and yet hospitals contracting out cleaning services save an average of £1 million a year owing to cost reductions.
Many believe private providers are strongly motivated to participate in quality-shading activities to cut costs, but also decrease quality at the same time. Previous studies argue that the cost reduction of contracting out public services might emanate from investment techniques - hiring cheap labour without enough training or skills.
For some services, quality measures might not be straightforward or easily observed. So the quality characteristics of the services are not easily designated or described in the contract or, if so, there would be high monitoring costs. And public administration is sometimes unaware of private providers' operations and delivery process, so monitoring of outcomes can be challenging.
Contractors often believe their failure to meet standards won't result in a cancelled contract or penalty due to the tedious process of re-tendering. Our research into outsourced cleaning in NHS hospitals shows the public-private model is not attaining the expected performance. Empirical findings support the quality-shading theory. Hospitals that are outsourcing display lower cleaning standards on wards and bathrooms and higher infection rates, implying that outsourced providers cannot effectively apply the optimum methods of cleaning.
Dr Shimaa Elkomy is research fellow at the University of Surrey