Nonprofit Adaptation to Performance-Based, Managed Care Contracting in Michigan's Foster Care System

Abstract

While performance-based and managed care contracting initiatives have become increasingly common in service sectors populated by nonprofit organizations, the impact of these new service arrangements on involved nonprofit agencies has not been fully explored. This study describes the obstacles that nonprofit agencies encountered, and the adaptations they made, as they moved from a traditional reimbursement system to a performance-based, managed care contracting environment in the delivery of foster care services. Based on analyses of telephone interviews with administrators and supervisors across nine nonprofit child welfare agencies, this study suggests that agencies' service delivery patterns, interdepartmental activities, and interorganizational relationships were substantially affected by the transition to this new contracting arrangement. These findings and their implications are discussed.