Risk allocation in service triads – The case of Dutch and Finnish home care procurement. Issue 4 (October 2020) - Uenk, Niels
Abstract: We compare how Finland and the Netherlands organize home care services, both in legislation and in procurement practices, from a service triad risk perspective. We find Finnish public bodies rely to a great extent on inhouse provision and hybrid outsourcing. Dutch public bodies rely completely on outsourcing, using framework agreements with many care providers in parallel. Incentives used in contracts affect financial and service quality risks assumed by buyers, suppliers, and end-customers in the triad. This research improves our understanding of risk allocation among the actors in the service triad based on buyer decisions on outsourcing and supply market conditions. The risk profiles for all three actors in the home care service triad are affected by the manner in which public bodies outsource home care services: the purchasing practices. The delivery method (whether public and private or all private) and the number of providers impact the information position of the municipality versus the care provider in the triad. Highlights: Finnish and Dutch municipalities are responsible for the coordination of home care – a service triad with a public buyer. Public buyers face different risks in service triads compared to private organizations. Outsourcing arrangements and purchasing practices affect the risk allocation among the three actors in the service triad. Hybrid inhouse/outsourced service provision and parallel sourcing reduce quality and financial risks emerging in service triads. Contract incentives determine how financial and quality risks are allocated among the three actors in the service triad.