Sector Choice for Local Health Contracts: Public, Nonprofit, or For-Profit?

Abstract

"Once a local government chooses to externally produce a health service, it faces the decision of the appropriate sector with which to contract. Local government scan contract with other governments, for-profit firms, and/or nonprofit organizations. This sector choice decision is modeled as a function of sector differences in the availability of producers and in the potential for cost reduction in service delivery, and different constituency preference s with respect to sector choice. The model is estimated with a multinomial logit analysis on a national sample of local government health contracts. The empirical analysis reveals the importance of availability, cost concerns, and constituency preferences in the sector choice decision for local health services."