Higher performance with increased risk of undesirable outcomes: the dilemma of US child welfare services privatization

This paper examines the performance implications of privatization in U.S. child welfare service systems. We combine insights from contracting and nonprofit management literatures with a 'deficit model' of privatization to posit that fully-privatized systems delivered by nonprofits outperform their governmental counterparts. Due to resource constraints, however, we expect nonprofits to prioritize the greatest good for the greatest number of clients over client-specific outcomes. We use a quasi-experimental research design and a national administrative dataset, finding that full-scale privatization increases children's likelihood of achieving the most desirable outcome and simultaneously places her at greater risk for the least desirable outcome.