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Contexts/Settings: Corporate Settings

Abstract and Keywords

Human service corporations provide opportunities that social workers are just beginning to recognize. Although the commercial provision of services has negative features, expansion of the for-profit sector bodes well for those professionals willing to consider it as a practice setting. Corporations have become prominent service providers in hospital management, nursing home care, managed care, child care, welfare, and corrections. Because for-profit firms are often more competitive than nonprofit agencies, privatization is likely to contribute to corporatization human services.

Keywords: corporate human services, privatization, private practice, practice settings

In an advanced market economy, corporations are a primary vehicle for distributing goods and services. Corporate involvement in social services is readily evident in the three sectors of American social welfare: (a) the nonprofit, voluntary sector, (b) the governmental public sector, and (c) the commercial, private profit-making sector. While social workers have been active in the voluntary and governmental sectors, historically, participation in the corporate sector has been much more recent. While posing significant challenges to social welfare policy, expansion of the corporate sector also presents important opportunities for social workers.

The fact that the political economy of the United States is democratic-capitalist virtually assures that large businesses would be prominent in national affairs. With the growth of the service sector of America's postindustrial economy, corporate activity in human services has expanded commensurately. Corporate activity was catalyzed by passage of Medicare and Medicaid in 1965, through which the federal government reimbursed private providers for health care, and subsequently augmented by the 1973 Health Maintenance Organization Act, which subsidized managed care ventures. Since then entire markets have been exploited by corporations: nursing homes, hospital management, managed care, child care, corrections, and welfare. This list demonstrates the openness of the American economy and an ineluctable fact of contemporary commerce: so long as businesses abide by the law, they cannot be prohibited from establishing markets in social services or anywhere else for that matter. To the extent corporations are more competitive than nonprofit providers within a market, commercial human service providers stand to benefit from government outsourcing service provision through privatization (Donahue, 1989).

Since the mid-1970s astonishing growth in the number and scale of human service corporations has been witnessed. In 1981, 34 human service corporations reported revenues exceeding $10 million; by 2003 the number had increased to 241. Many human service corporations have become household names: Beverly Enterprises (nursing homes), Hospital Corporation of America (hospital management), Kindercare (child care), Magellan (managed care), Wackenhut (corrections), and Maximus (welfare). The scale of several corporations dwarfs public institutions; for example, in 2004 United Health Group claimed 33,000 employees and $28.8 billion in earnings while Tenet boasted 109,759 employees and $13.2 billion in revenues (Karger & Stoesz, 2006). Although there is considerable turbulence in the corporate sector as firms acquire one other, develop new product lines, expand into new markets, and go out of business, the future of this sector appears to be robust.

Opponents of Corporatization

Corporate provision of social services presents several critical issues for social work. Through privatization, corporations increasingly contract with government for provision of services, promising more flexibility, lower costs, and increased accountability, although these outcomes are often disputed. Criticism of commercial activity in social welfare abounds. If corporations are particularly aggressive, they may force nonprofits out of the same market. Corporations may lower costs by deprofessionalizing the workforce and encroaching on the autonomy of professionals in independent practice and social agencies and serving less troubled clients through a strategy of preferential selection. It may be difficult for public officials to document irregularities in service provision, since most corporate information is considered proprietary. Corporations enjoy the liberty of leaving unprofitable markets in which event they may dump large numbers of consumers who must then be cared for by nonprofits or government agencies.

At the policy level, the implications of corporatization are more ominous. Corporations that collude with lawmakers and bureaucrats are well positioned to leverage policy so that it complements their self-interest as opposed to the public interest. A recent example is the 2003 Medicare Modernization Act, which provided a windfall for pharmaceutical and managed care companies at considerable expense to taxpayers (Stoesz, 2005). Thus, the emergence of a human service industrial complex is a direct threat to governmental and nonprofit providers. For these reasons, corporate involvement in social services cannot be ignored.

Proponents of Corporate Sector Human Services

Adherents of market approaches to social policy point to the many advantages of corporations in social welfare. An ineluctable fact is that most Americans obtain goods and services through markets, except for the poor who must rely on inferior government provisions, effectively segregating them from the economic mainstream (Funiciello, 1993). Through access to commercial financial markets, corporations can readily obtain capital for program deployment and expansion.

Corporate activity in social services also presents opportunities for social workers. As government and nonprofit programs have lagged behind demand for services, as a result of budget cuts and static charitable giving, and the corporate service sector expands accordingly, jobs are increasingly available for social workers. Anecdotal information indicates that social workers find the ambiance, salary, and management accorded by the corporate sector supportive of their work. Corporations also offer important lessons to social work managers in nonprofit and governmental agencies. Innovations in information systems, team-building, employee ownership, and decentralization are borrowed from the corporate sector. Similarly, nonprofit managers often seek to augment their agency's income by engaging in commercial revenue-generating activities, which are considered tax-exempt so long as they do not violate the Unrelated Business Income Tax provisions of the tax code. In recent decades human service administrators have begun to establish social enterprises as a means to advance social welfare under commercial auspices. Prominent among these has been asset building, as evident in Michael Sherraden's idea of Individual Development Accounts (Families in Society, 2007).

Corporations also present important job opportunities for upwardly mobile social workers. Just as social workers have moved into the management of nonprofit and governmental organizations, they could move into corporate management should they choose to. Finally, corporations present new opportunities to serve emerging markets, such as aging baby boomers. Conventional means for funding new programs mounted by the nonprofit sector require grant applications to foundations while those initiated by government depend on legislative action or the approval of public bonds; by contrast, corporations can generate funding almost instantly from financial markets. Conventional means of leveraging funding for social programs have consisted of laborious fund-raising campaigns on the part of nonprofit agencies or bond issues by government that must be approved by taxpayers, program expansion strategies that are not only time-consuming but not guaranteed to succeed. By contrast, commercial providers can quickly secure capital from private markets based on a well-crafted business plan.

In a health and human services market that is increasingly competitive, social workers who ignore the opportunities attendant with corporate social services may be doing their clients, themselves, and their profession a disservice. By way of illustration, since the 1980s, Health Maintenance Organizations (HMOs) reorganized health and mental health practices in most regions of the United States. In response to what many professionals perceived to be abridgments of their practice prerogatives, many doctors and ancillary personnel established Individual Practice Associations (IPAs) to counter HMOs. Between 1990 and 2003, an increasing number of health and mental health professionals were no longer practicing under the aegis of HMOs, but under IPAs instead, and their share of patients increased accordingly (U.S. Department of Commerce, 2006). Although social work provides the largest volume of mental health services and at lower cost than psychiatrists and psychologists, many social workers in private practice remain vulnerable to the predations of managed care companies. A social work IPA would be a means to counter corporate incursions into the markets served by private practitioners.

Social work's antipathy toward corporate human service provision is paradoxical insofar as many social workers are engaged in commercial activity through private practice. The expansion of managed care, often perceived as occurring at the expense of private practitioners, may account for this. Regardless, corporatization of human services is a reality with which social work must contend. Reluctance to take human service corporations seriously probably furthers the evolution of a “human service industrial complex,” which manipulates public policy to the advantage of commercial providers at the expense of governmental programs and nonprofit agencies. Moreover, a case could be a made that social work's presence in the board rooms of America's human service corporations might contribute to policies and practices that are more socially responsible.


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