Co-op Models for the Production of Health and Social Services

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John Restakis (from ch. 6 of Humanizing the Economy):

"Co-op models for the production of health and social services have shown a remarkable capacity to provide new types of care at a cost, and in a manner, that blends the benefits of a public good with the choice and responsiveness usually associated with a private sector service. For example, social co-ops have played a major role in improving both the quality of home care and the working conditions, wages, and professional competence of home care-givers. Another example is the provision of life-skills training and employment to people with intellectual disabilities. In the Kingston worker co-ops, members of the co-ops are intellectually handicapped adults who were once “clients” of sheltered workshops. In the co-ops, they not only find meaningful employment, they sit on the board of directors and have a say in how the enterprises are run. The reasons for these kinds of improvements stem from the structure of co-operatives as user-owned and operated organizations. Like public services, co-operatives have a mutualistic function –to serve the collective needs of member-owners. In the case of social co-ops, these aims are extended to the community as a whole. But the scale of delivery is much smaller, community based, and unlike government systems the design and delivery of these services rests in the hands of co-op members. The operation of these control rights by members provides the choice with respect to service that is characteristic of the private market.

In the case of health services, co-operatives have pioneered a patient-focused approach to health care that is a direct consequence of user control over the design and delivery of these services. Similarly in the provision of social care, social co-ops and other forms of social enterprise have increased the range of services available to citizens while simultaneously containing the costs for the provision of these services by the state. In both cases, the co-op model has been most effective when it is developed as a complement, not a substitute, to public services. In those places where social co-ops are most advanced, their proponents advocate strongly for government to continue playing a central role in the funding and regulation of public services.

The case of social co-ops in Italy shows that the multi stakeholder structure of social co-ops is a key factor in the role these co-ops play to lower costs, increase service innovation, address market failures, and respond to the changing needs of individual users. The involvement of stakeholder groups in the production and delivery of services confers advantages that differentiate these co-ops from conventional non-profits, private firms, and government agencies.

Since social co-ops are controlled by a variety of stakeholders, costs are contained because they are not controlled solely by those who receive monetary benefits from the organization – employees in the case of non-profits, or investors in the case of private firms. The control rights exercised by consumers and volunteers moderate the distribution of profit and the rise of costs and so social co-ops can provide services more efficiently. The involvement of consumers and volunteers in the delivery of services also lowers the cost of production.

The involvement of multiple stakeholders reduces the traditional asymmetries of information that compromise the efficient delivery of services in non-profits, welfare service models, and private firms. Consumer involvement in particular, increases access to information, spurs innovation in service design, and raises the levels of transparency and accountability in the organization.

Social co-ops are better able to cope with insufficient budgets, which is a key market failure of government services. The combination of public and private funds that are used to capitalize services is a key strategy for distributing costs in a way that subsidizes those who are less able to afford the services. The involvement of multiple stakeholders also limits the monopoly market control of government services and the attendant problems in the ability of users to access services that actually reflect their preferences.

Finally, since social co-ops are not as limited in the distribution of profits as conventional non-profits, they are better equipped to raise capital from members, funders, and other stakeholders. They are also able to provide a limited return on capital to investors and funders. These capital advantages make social co-ops more entrepreneurial and more able to finance innovation in service delivery or the development of new projects.

Social co-ops, like all co-operatives, are defined by the fact that they grant control rights to stakeholders and members. In this sense, they are distinct from other non-profits which are defined essentially by the constraint on distribution of profits. In a co-operative structure, it is the element of member control and ownership of the co-operative that defines both the culture and the operations of the organization. In those social co-ops where the service users are also members, the operation of control rights has the capacity to transform the user from being merely a passive recipient of care – an object of care systems, to being a protagonist in the design and delivery of the care – an active subject in the care relationship. Social care becomes a shared outcome between caregiver and care receiver. This element of personal control is fundamental to the reform of social care systems, particularly for those who are most dependent—people with disabilities, the poor, and the marginalized. The reform of social care, its transformation into a humane system of social relationships, requires at minimum its democratization."