Dissecting privatization

Shedding light through an analysis of the dismantling of public long-term care

Privatization is the move away from shared responsibility for the collective provision of and control over goods and services that provide for our community and individual needs. There is a lot of confusing discussion of what we mean by private and public, and thus about privatization. We have found it useful to analyze six forms of privatization, although we keep adding to the list as others do as well.1 We also find it useful to use examples from our years of research in long-term care, although these patterns appear across the public sector.

The privatization of ownership

The first and most obvious form of privatization is for-profit ownership. This ownership takes some visible and some less visible forms. It can be ownership of the land, of the building, of the service delivery, or of all three—privately owning the land, the building, and operating what is primarily a publicly funded service. Contrary to popular defenses of these kinds of privatization, they do not mean more innovation, cost savings for the public, better quality, or more choice. We see all four kinds of ownership in long-term care and their consequences for care and care work. The 2020 Ontario Long-Term Care COVID-19 Commission confirmed what researchers have been demonstrating: namely, that for-profit long-term care homes have lower staffing and retention rates, pay less, provide lower quality care, and send more residents to the hospital, where care costs us all more.2 Moreover, for-profit homes are often the last choice of those needing care. And during COVID-19, for-profit homes cost more lives. All Ontario long-term care homes receive the same public funds, so there is no cost savings, and the only innovation seems to be in profit-making.3
Public/private partnerships can combine these forms, with a for-profit company financing and building a hospital, for example, as well as providing services like housekeeping and maintenance but leaving the medical services mainly to the public sector to deliver. Such partnerships have been used for schools as well even though research has consistently shown that such partnerships cost more and often result in failures and delays, among other problems.4

It does not stop there, however. The ownership can include staff from temp agencies, other contracted services like food, housekeeping, laundry, security, and even management. And the costs are higher to the public purse compared to having employees do the work. Temp agencies are making millions of public dollars out of the consequences of staff burnout and working conditions during the pandemic. In Ontario long-term care, a temp agency charges $150 for a Registered Nurse (RN), while staff RNs are usually paid around $60, a charge that “does not include the 35% surcharge called the ‘agency fee.’”5 Meanwhile, the employees of the contracted services have precarious employment and service quality is lower than it is with in-house services. Continuity and teamwork are undermined.

It is important to note that it is not only the volume of for-profit ownership that has expanded rapidly. It is also the nature of the ownership. The owners are increasingly giant corporation and private equity financing. If you visit the website for Toronto’s Women’s College Hospital, for example, you find the parent company “BBGI Global Infrastructure SA is an infrastructure investment company.”6

The privatization of managerial practices

Along with neoliberalism came the notion that governments and their services should copy the for-profit sector to make them both more efficient by running them like businesses. New Public Management theories have been adopted in the public sector with profound implications for the quality of work and services. Performance indicators, increasing documentation, and surveillance of the work and the workers were combined with a focus on a more parsimonious use of resources.7 Like just-in-time production, it is just-enough care and just-enough teachers, or barely enough and not enough as became increasingly obvious with the pandemic. Part-time and casual employment increased. Public sector wages and benefits came under attack, based on an argument that wages and benefits were higher than in the private sector, undermining the labour market. Yet research indicates that the differences largely reflect a smaller pay gap between women and men, especially in lower-level jobs, and greater equity by age and occupation, differences which themselves are a result from higher unionization rates along with the application of pay equity and other equity policies. Such managerial strategies undermine equity and increase job precarity overall.

The privatization of payment

A third form of privatization relates to who pays. As individuals and households, we pay more for critical public services. This kind of privatization includes both new fees and the failure to provide sufficient public services, thus forcing people into paying privately for the service or going without.

The fees are more obvious. They may appear, for example, when physicians charge an annual fee to join their practice or to provide you with your health records, when nursing homes charge for footcare or physiotherapy previously provided as part of the care, and when schools charge for activities.

Less obvious is the cost shift that results from reducing the availability of public services or ceasing to provide them at all. Increasingly, families are hiring private companions in nursing homes8 or at home to make up for the gaps in public care. Or they pay for for-profit retirement homes because there are 40,000 individuals waiting for long-term care, people who have been diagnosed as needing such care. Or families pay for private tutors to make up for the large class sizes that can limit individual attention. Some public services are simply no longer available or only exist in limited supply, like some kinds of mental health supports and various kinds of eye care.

Shifting to fees and providing inadequate public services not only increases inequality in access, it also undermines faith in the public system and encourages those with the money to seek private services, further undermining the support for public services from those who can pay. At the same time, we all pay for at least part of this cost shifting directly as some of the costs can be used as tax deductions that further increase inequality and lower our collective resources.

The privatization of labour

By cutting back and by not providing sufficient staff or services, governments are shifting work to those who are unpaid for the labour. When there are infusfficient numbers of teachers, care workers, day care spaces, or homecare services, for example, necessary labour is either left undone or left to be done by those unpaid for the job. Sometimes the work is taken up by those otherwise paid for the job, as when teachers come in early or stay through lunch to help students in need and when nurses fail to take their breaks and stay long after their paid hours are done. Much of the burden created by under servicing is taken up by those untrained for the job, leading to those with the least financial resources most likely to provide more of this unpaid work, placing an increased burden on women, immigrant populations, newcomers to the country, and other work-marginalized groups.

In our research on long-term care, we have come to talk about labour of unpaid worrying. Those paid for the labour, as well as family and friends who do it without pay, stay awake at night worrying about the work left undone.9

With COVID-19, some of this unpaid labour became more visible to the media and policy makers. When families were barred from nursing homes, for example, it became clear that families had long been a secondary support, providing essential labour in an under-funded system. Recognizing this during COVID-19 restrictions, governments scrambled to let the families back in as soon as possible. But the unpaid labour remains necessary without enough paid staff.

The privatization of decision-making and governance

All of these forms of privatization have an impact on decision-making—moving many decisions from the public to the private realm of corporations and managers, in turn moving decision making away from governments and the public. As the management professor Henry Mintzberg so succinctly puts it, “Business is in the business of selling us as much as it possibly can,”10 and I would add, paying as little as it can for resources, including the labour force, to make a profit. To do so, they often claim, they must keep many processes secret so as to keep their supposed competitive edge.

Closing the books to public scrutiny is not the only way corporations limit their accountability. Using the case of long-term care, Tamara Daly talks about public funds and private data to show how the quality indicators required of nursing homes and promoted as allowing public accountability obscure more than they reveal.11 But even better public data may not ensure that for-profit organizations are held accountable for our public money. As Hugh Armstrong and others involved in our research on long-term care have shown, the increasing involvement of private equity firms and complex corporate structures make it difficult to know who owns what, especially with the rapid changes in ownership that is characteristic of corporations.12 The lack of transparency is combined with lack of public control, an absence that becomes particularly obvious when corporations go bankrupt or simply decide to leave because profits are too low.

And of course, even if we had better data and could identify easily who owns what we would still need governments to hold these organizations accountable, and we have had little evidence of that. Indeed, we see the reverse. For example, the Ontario Progressive Conservative Government introduced liability shield legislation to protect nursing homes from lawsuits in the wake of COVID-19. At the same time, individual purchases of services or investment in them can also shape the extent to which services are privatized, providing another limit on collective governance.

The privatization of our heads

These forms of privatization help undermine our commitment to public services. Increa­singly, we are not only held responsible for services that we and our families need, but we also feel responsible for services and our own health. Similarly, it seems to make sense to be able to purchase health care and education if you can afford it, for example, and to accept that for-profit services are better and that they offer more choices. We think this despite the evidence to the contrary and the evidence showing the negative consequences for equity. In health care, Ontario Government assurances that profits for clinics will be covered by OHIP undermine claims that payment means inequitable access while ignoring our ultimate shared payment for the profits. This spin also obfuscates the ways private clinics create more fragmentation as well as exascerbate some forms of inequity.

Dissecting the various forms of privatization helps us move past the confusion over the different forms it takes and helps address the claim that because we already have lots of private delivery of public services, there should be no concern with more. We need also to address the undermining of public services by talking about profitization. Keeping profitization in mind when considering privatization, highlights that for-profit organizations are required to search for profit first, thus transforming public services and the work involved to carry out those services in ways that undermine our fundamental rights, our control over our collective funds, and our solidarity.

NOTES
1. See, for example, Armstrong, Pat and Hugh Armstrong, eds. (2020) The Privatization of Care: The Case of Nursing Homes New York: Routledge Pat Armstrong, Hugh Armstrong and M. Patricia Connelly (1997) “The Many Forms of Privatization” Studies in Political Economy, 53: 3-9.
2. Marrocco, F., A. Coke and J. Kitts, (2021) Ontario Long-Term Care Covid Commission, Final Report. Toronto: Queen’s Printer. https://files.ontario.ca/mltc-ltcc-final-report-en-2021-04-30.pdf
3. Cochrane, D.T.and Toby Sanger(20220),Careless Profits: Diverting Public Money from Long Term care in Ontario. https://www.taxfairness.ca/en/resources/reports/report-careless-profits
4. Hamel, Pierre J. (2007). Public-Private Partnerships (P3s) and Municipalities: Beyond Principles, a Brief Overview of Practices INRS Centre – Urbanisation Culture Société, Montréal. Loxley, and Salim Loxley (2020) Asking the right questions: A guide for municipalities considering P3s https://cupe.ca/guide-municipalities-p3s. Whiteside, Heather (2016) About Canada: Public-Private Partnerships Winnipeg: Fernwood.
5. Welsh, Moira (2023) Nursing homes say these fees are costing them tens of millions of dollars The Toronto Star, February 14.
https://www.thestar.com/news/canada/2023/02/14/temp-agency-fees-eating-up-government-funds-amid-nursing-home-staffing-crisis.html
6. BBGI Sicav General Information (n.d.) https://pitchbook.com/profiles/company/60835-42.
7. Lane, Jan-Erik (2000) New Public Management An Introduction London: Routledge. https://doi.org/10.4324/9780203467329; Hood, Christopher (1991). A Public Management For All Seasons? Public Administration, 69, 3-19.
8. Daly, T. & Armstrong, P. (2016). Liminal and invisible long-term care labour: Precarity in the face of austerity. Journal of Industrial Relations, 58(4), pp. 473-490.
9. Armstrong, Pat (ed.) Unpaid Work in Nursing Homes: Flexible Boundaries. Bristol, UK: Policy Press, Forthcoming July.
10. Mintzberg, Henry (1996) Managing Government, Governing Management by the Magazine (May–June). https://hbr.org/05/managing-government-governing-management
11. Daly, Tamara (2020) Public Funds, Private Data: A Canadian Example, Pp. 125-140 in Armstrong and Armstrong, op cit.
12. Armstrong, Hugh (2023) Piercing the Corporate Veil: Nursing Home Ownership in Turbulent Times in Pat Armstrong and Susan Braedley eds. Care Homes in a Turbulent Era. Do They Have a Future? Cheltenham, UK: Edward Elgar Press; Jacobsen, Frode F. and Gudmund Ågotnes (2020) Accountable For-Profits in Nursing Home Services? Pp. 140-155 in Armstrong and Armstrong op cit.