Explore the role of nonprofits in local health departments’ contracting out decision

Abstract

Although government contracting has been growing fast for many public services, local health departments still maintain most service delivery in house. This study analyzes the outsourcing data from the 2016 National Profile of Local Health Department Study. Through tobit and two-factor model analysis, this study investigates the role of nonprofits in affecting the contracting out decision in local health departments (LHDs). The findings demonstrate different mechanisms in the two-step outsourcing decisions: (1) the make-or-buy decision is influenced by the extent of market competition and (2) the buy-more-or-less decision is impacted by the rate of health care nonprofits as well as the extent of market competition. Meanwhile, LHDs would keep service delivery in house to provide health care safety net for those vulnerable population. These results provide implications for how local health department directors should tailor their contracting out decisions to meeting public health service needs.