Organizational Change and Foster Care Service Provision in a Market-Based Contracting Environment

Objective: Recent research suggests that nonprofit child welfare agencies reorganize their service technologies and interorganizational relationships to manage the heightened financial risk in performance contracting and managed care (PBMC) environments (McBeath & Meezan, 2006; Provan, Milward, & Issett, 2002). Research has also shown that foster children and their families may receive fewer services in these market environments (Cuellar, Snowden, & Libbey, 2001; McBeath & Meezan, 2008). The current study is the first to examine whether market-based organizational changes in service technology and linkages with external agencies are associated with changes in service provision to this population.

Methods: Data come from a mixed-method, multi-level evaluation of a PBMC initiative in Wayne County (Detroit), Michigan. Quantitative data were collected on a sample of 175 foster children served by six nonprofit agencies that had contracted with Michigan's public welfare agency under a PBMC reimbursement system. Service data were collected for up to 930 days concerning the amounts of in-agency and out-of-agency services that agencies provided children and families. Additionally, qualitative data concerning organizational changes to the market-based environment were gathered through 55 1-3 hour interviews with administrators, supervisors, and caseworkers from these agencies. Analyses for the current study draw from a merged data file that identifies child, family, and caseworker characteristics, the amount of services each agency delivered, and the changes each agency made in the delivery of its foster care services and its interorganizational relationships to adapt to the PBMC model. Hierarchical negative binomial regression models were employed to test whether specific organizational changes were associated with foster care service provision.

Results: Four specific organizational changes were significantly associated with foster care service provision controlling for other factors. Foster children and families received 54% more visitation-related service contacts if they were served by agencies that developed interdepartmental service coordination and referral teams. Mental health service utilization was 66% lower for foster children served by agencies that had reduced the number of in-agency therapists; and 55% more service-related phone calls were placed on behalf of foster children at these agencies. Twice as many service-related phone calls and 32% more referrals for community-based services were made for foster children and families served by agencies that dedicated increased resources to meeting families' concrete needs (e.g., housing, furniture). And 80% more service-related phone calls and 27% more referrals for community-based services were made for foster children and families served by agencies that developed interagency trainings related to the transition to the specific PBMC contracting initiative.

Discussion: These findings suggest that agencies made some strategic organizational responses to changing financial-institutional conditions and that these changes influenced service provision. There thus should be greater attention to whether these organizational changes lead to the achievement of performance targets and improved system outcomes in PBMC environments. There also needs to be further exploration of the relationship between structural-technical changes within and between child welfare agencies and changes in child and family outcomes. More generally, research should clarify the institutional and organizational context for effective foster care service provision.