Mechanisms behind privatization: A case study of private growth in Swedish elderly care

Abstract

For many years the Swedish Welfare State has been associated with a welfare model in which the public sector dominates both the provision and financing of the elderly care system. However, influenced by the ongoing trend of New Public Management, the past 15 years have been characterized by governmental regimes encouraging competition and as a result there has been a substantial increase in private providers. This case study on elderly care in Sweden provides new insights into the mechanisms behind the spread and growth of privatization. Our results show that in 1990 only 1% of the labour force in the elderly care sector was employed by private organizations, in comparison to 2003 when the private share had increased to 13%. The accompanying organizational changes have been controversial and are often criticized. In general, left-wing politicians have frequently defended the traditional welfare model dominated by public providers, whereas right-wing politicians have urged for a larger share of alternative providers. In this study, statistics between the years 1990 and 2003 were used to model the relationship between privatization and a number of economic, political and social/demographic variables. The results from regression and diffusion analysis imply that privately managed elderly care has established itself mainly in metropolitan areas dominated by right-wing regimes. Surprisingly, neighbouring municipalities tend to follow these pioneers irrespective of their political colour or economic situation. In fact, after shifting political power many of those neighbouring municipalities dominated by left-wing regimes not only maintain an abundance of private contractors but also encourage a continued process of contracting out publicly managed elderly care units. As a result, clusters of municipalities with an increasing degree of privatization arise despite political and economic differences. In conclusion, geographical proximity seems to be an important variable in addition to population density, ideology and financial situation when privatization reforms are implemented in the Swedish elderly care system.