Private Sector Better, Cheaper? Not at All

Source: Ron Patenaude, Labor Notes, April 5, 2013

It’s become popular among Republicans (and plenty of Democrats) to decry public workers as overpaid and inefficient. They love to contract out, claiming the private sector can deliver services more cheaply and cost-effectively. But the reality is quite different. There is often little or no accountability for the use of these government funds. Stacks of tax dollars are going to private organizations that fail to follow their own missions. Politicians are eager to privatize, and employers are eager to take advantage of lax—and sometimes inefficient or corrupt—regulatory systems….

…The case of mental health patients is one of the most obvious examples of the misuse of public funds. It is now 20 years since Northampton State Hospital closed its doors, after a state commission recommended shifting mental health services to private vendors. The last of the NSH patients were reassigned to other facilities, such as the private, for-profit Charles River Hospital West. NSH used to provide care (albeit with a long history of problems) to thousands of Massachusetts residents with mental health issues. By 1993, many patients had already been sent to live in the “community.” Many never adequately assimilated to living there, and were soon living on the streets or died. This was all supposed to save the state money. But a state audit showed that the restructuring produced no savings—in fact, a loss—and revealed big problems with the quality of services patients received at the new for-profit facility. Five years later, Charles River Hospital West went bankrupt and closed its doors, and criminal charges over misuse of funds were filed against its owner. …