Interorganizational disparities in foster care service provision

Performance contracting and managed care have recently migrated from the behavioral and physical health care sector into child welfare, and are being introduced under the premise that the financial incentives embedded in market-based models will motivate agencies and their workers to improve the cost-effectiveness and quality of care to children and families. These models, however, have been associated with disparities in service provision and client outcomes. This paper reports new findings from a longitudinal natural experiment that examined the effects of a performance-based, managed care contracting mechanism on service provision to 243 foster children and families served by nine nonprofit agencies. It finds dramatic differences in the intensity of agencies' foster care service provision, both between agencies in different financial environments and among agencies within similar contracting regimes. While the finding of service disparities between contracting environments is similar to results from studies of the effects of market-based models in the health care sector, the identification of considerable interorganizational service disparities within the same contracting environment is novel in child welfare. This paper thus provides the first estimates of distributive inequities in foster care service provision both within and across contracting environments, and introduces questions of equity and fairness in how child welfare agencies organize services to foster children and families in market-based contracting environments.