Make or buy?

Long-term care services in Sweden: Lessons for policy


Ricardo Rodrigues


Kai Leichsenring, Juliane Winkelmann


The New Public Management approaches in the 1980s fostered the development of quasi-markets for the provision of public services in order to improve efficiency as well as user satisfaction with service provision in Europe. As a consequence, the share of private (for-profit and non-profit) providers in residential and home care in most European countries increased considerably over the past decades. However, given the high complexity of long-term care services and the difficulty of defining clearly measurable outcomes, contracting out of many aspects of long-term care services requires time and investments in a strong regulatory environment and the development of evidence-based guidelines.


While market and government failures are present in long-term care, one key question is thus whether to ‘make or buy’ such services in order to establish a balanced mix that responds to citizens’ expectations and demand.The “Make or Buy” project, commissioned by the Swedish Ministry of Health and Social Affairs, sought to provide an answer to the question, whether to ‘make or buy’ the provision of long-term care. The project reviewed evidence from several countries and provided policy lessons and mutual learning opportunities on the introduction of market mechanisms in long-term care and its impact on the outcomes for users, on quality of care, the management of care markets and quality management systems. The results gave guidance to the Swedish stakeholders as well as to policy-makers in other countries. Therefore, the objectives of the project were:

  • To elaborate on theoretical aspects relevant for the make or buy decision (competition, transaction costs, contract design, market mechanisms, organizational theory).
  • To map experiences of selected countries with the introduction of competition and user choice.
  • To review empirical findings on differences in long-term care provider quality between types of ownership (public, private, non-for-profit).
  • To identify mitigating methods and mechanisms to address critical issues of quality assessment and quality assurance in a mixed economy of long-term care.
  • To discuss future challenges related to the findings and on the basis of current international developments in the supply of social services.


The results and implications of privatization and individualization of care services on competition, choice and quality of care were discussed with Swedish experts in long-term care in a workshop held in Stockholm on 29 January 2014.

There are significant barriers to "buying" of long-term care, most notably, those arising from difficulties in observing quality and assigning outcomes to particular interventions and providers. While seldom accounted for in evaluations and studies, transaction costs may be significant in long-term care. Other important barriers are the nature of care tasks, where continuity and relational components are desirable outcomes, and the characteristics of the "consumers" of care. Despite these barriers, there are alternative ways to introduce elements of competition in long-term care that should merit consideration (e.g. network contracting). While at the same time, choice over care tasks and identification of the carer are very relevant aspects to improve quality of care.


Swedish Ministry of Health and Social Affairs


01/2014 – 12/2015