The New Human Services Industry: Changing the World for the Profit or For the Better?

Abstract

Summary

Charles Darwin once said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”  In the human services industry, the for-profit sector has adapted adroitly to the current trends of budget-cutting and privatization of government services through third-party contracts. While they have been busy consolidating, the nonprofit organizations as a whole remain more fragmented and their ability to change hampered by archaic business structures and advocacy implementation.

With the dawn of the Affordable Care Act, human services organizations will see an increase in Medicaid participants and a push towards diverse, impact-based initiatives through technological advancement and collaboration. Structurally, for-profit companies have the upper hand. They have the flexibility to invest in and reduce the cost of services, while nonprofits continue to focus on their mission—losing sight of the operative goals for efficiency and solvency. For-profits have also smartly used their corporate clout to gain political influence, using both the dollar-driven political process and engaging officials through lobbying efforts to ensure access to contract bidding and policy issues like unfettered reimbursements for government services like Medicare.

The trend towards human services corporatization may seem inevitable, but it is not. Innovative solutions for engaging the competition exist and are already producing sustainable growth in the nonprofit arena.

These sound concepts not only hold the key to nonprofit survival but also create a larger impact by addressing society’s growing needs. Consolidation strategies in the nonprofit human services sector through acquisitions, affiliations and mergers are imperatives moving forward, among other business model changes, to strengthen its stability and renew its political prescience. By remaining flexible as an organizational network with a clear focus on the future market, nonprofits are primed to utilize the recent disruptive forces for inspired growth.

The salient point in the comparison of for-profit versus nonprofit human services entities often emerges as a question of quality. Previous public service privatization ventures, such as child welfare systems, have historically done little to boost service quality or innovation. In this era, can large corporate interests be expected to serve societal needs over the demands of shareholders while also promising affordable solutions to seemingly insurmountable welfare concerns? Many of the publicly traded for-profit human services organizations specifically list criticism of privatization and operational quality as a “risk” their investors must consider. Ultimately, are the limited American tax dollars distributed through government agencies for these services, to varying degrees, producing a good return on our investment? Perhaps when equipped with the proper tools for adaptation and business savvy, the nonprofit sector can remain a more dominant force in the human services industry, setting the standard of excellence for all players. The study of a number of for-profit examples will illustrate the current trends and impacts in addition to the actual and potential consequences. While this article provides no definitive road map to a market revolution, it is intended to highlight the many complexities nonprofits face in America as they seek a competitive edge.