For-profit organisations in managed markets for human services

Th e provision of human services, including paid care, relies substantially on government funding. Increasingly over the last 25 years, in Australia and elsewhere, that funding has been distributed using ‘competitive’ market mechanisms. Th e result has been a widespread development of managed markets, also known as ‘quasi-markets’, in human services. Th ere are many variants of managed markets, but they are all distinguished from conventional markets1 primarily by the fact that government is the source of much, if not all, of the purchasing power of the users of services. Th is enables government to dictate how these markets operate in ways that go well beyond the powers of government in most conventional markets. In turn, government action in shaping the particular form of each managed market will substantially infl uence the types of service provider organisations that operate in that market, including the extent to which for-profi t organisations (FPOs) are present. Th is chapter reviews some key characteristics of human services, managed markets, and FPOs, as a basis for examining the type of service providers that should and do operate in these markets, particularly in terms of the growing role of FPOs. Th is analysis can assist in establishing whether there may be justifi cation for limiting or encouraging the participation of some types of providers in these