The role of the third sector in providing primary care services -- theoretical and policy issues.

• Author: Crampton, Peter

Abstract

The purpose of this paper is to promote debate on the devolution of primary care services to the third sector. The paper first discusses definitions of the term "third sector", then provides a precis of important political and economic theories related to the third sector. This is followed by a brief account of the development and role of third sector primary care in New Zealand. The final section discusses policy issues arising from third sector provision of primary care. The paper concludes that the emergence of third sector primary care in New Zealand has been consistent with international experience of third sector involvement -- there were perceived "failures" in government policies for funding primary care, and private sector responses to these policies, resulting in lack of universal funding and provision of primary care and continuing patient co-payments. These failures created the type of "gap" that, based on international experience, third sector organisations tend to fill. If the existence in New Zealand of third sector primary care is accepted -- either as explicit policy or de facto -- policies may be required to limit the financial pressures placed on non-profits that may lead them to deviate from the social role they can and should play in New Zealand's mixed economy, and to help move the economy to an agreed balance of institutional responsibilities among private enterprises, governments and non-profits.

INTRODUCTION

The third sector is the non-government, non-profit sector of a country's organisational system. The third sector occupies a significant part in the social, political and economic life of many countries -- contributing, for example, to arts, culture, religion, recreation, and the provision of social services (Salamon and Anheier 1997b, Seibel and Anheier 1990). Research into the third sector has received growing attention over the past 30 years -- there are now at least four English-language journals specialising in "non-profit studies", and there has been a series of cross-national comparative studies examining the roles and extent of third sector activities (for example, James 1989, Anheier and Seibel 1990a, Salamon and Anheier 1997c).

There is a range of political and economic theories related to the third sector. Some of these theories suggest that a strong third sector is a necessary and healthy component of modern democratic societies, while others argue that the third sector is a mechanism for governments to eschew responsibility for what may be regarded as vital social services. The purpose of this paper is to promote debate and discussion of an aspect of primary care service and health policy development that has, to date, received very little attention in New Zealand -- (planned or de facto) devolution of primary care services to the third sector. The paper examines, from theoretical and policy perspectives, the advantages and disadvantages of third sector provision of primary care services. It is hoped that elaboration of theoretical and policy issues related to third sector primary care services will inform, more generally, policy debates regarding the role of third sector provision of services in other social service sectors.

The paper first discusses definitions of the term "third sector". The second section provides a precis of important political and economic theories related to the third sector. This is followed by a brief account of the development and role of third sector primary care in New Zealand. The fourth section discusses policy issues arising from third sector provision of primary care.

DEFINITIONS OF THE THIRD SECTOR

New Zealand society can be thought of as consisting of four sectors: public or state, private or commercial, a third or independent sector of non-profit community activity and voluntary association, and households (Cody 1993:2). The term "third sector" was first used by scholars in the United States in the early 1970s (Seibel and Anheier 1990:7). Other English language terms which are sometimes used to refer to the third sector include non-profit (the term used most commonly in North American literature), nonstatutory sector, voluntary sector (used commonly in the United Kingdom and New Zealand contexts), non-government organisations (NGOs), independent sector, the social economy, civil society, community organisations, charitable organisations, cooperatives and the commons (a term popularised by Lohmann (1992)).

Hall defined non-profit organisations as:

A body of individuals who associate for any of three purposes: (1) to perform public tasks that have been delegated to them by the state; (2) to perform public tasks for which there is a demand that neither the state nor for-profit organisations are willing to fulfil; or (3) to influence the direction of policy in the state, the for-profit sector, or other non-profit organisations. (1987:3) A more recent, and more restrictive, definition of "voluntary" and "non-profit" organisations was developed by the Johns Hopkins Comparative Non-Profit Sector Project launched in 1990 (Kendall and Knap 1996:18). Their structural-operational definition had four criteria which had to be met. To be classed as a voluntary body an organisation must have a constitution or formal set of rules, be independent of government and be self-governing, be not-profit-distributing and primarily non-business, and have a meaningful degree of voluntarism in terms of money or time through philanthropy or voluntary citizen involvement. (However, the directors of the project later noted, based on their observations of the non-profit sector from an international perspective, that private giving played a relatively limited role in non-profit finance (Salamon and Anheier 1997b).)

In New Zealand, many third sector primary care organisations do not meet the last criterion. However, the term "voluntary" itself is open to varied interpretation. For example, Nowland-Foreman (1997) refers to "voluntary" as people voluntarily coming together "not because of commercial motives or under force of law but because of a common commitment to a cause". Further, tax laws related to tax-deductible contributions vary from country to country -- rendering the notion of "voluntary" partly dependent on local tax regimes (James 1987:398). For this reason a more inclusive definition of the third sector is preferred here -- non-government and non-profit -- as it is more appropriate in the context of third sector primary care in New Zealand.

This broader definition fits with the tendency to use interchangeably the terms "third sector", "non-profit sector" and "voluntary sector" both internationally and in New Zealand (Ben-Ner 1987:434, Cody 1993, Copeman 1993, Hall 1987:4, James 1987:398, Nowland-Foreman 1997, Seibel and Anheier 1990:7). In any event, given the "terminological tangle" (Salamon and Anheier 1997a:12), a rigid unitary conception of the sector may be unhelpful (Dekker 1998). The various terms have overlapping but different meanings depending upon the local tradition of philanthropy and social and political contexts (Anheier and Seibel 1990b:382) -- "few societies have anything approaching a coherent notion of a distinct private nonprofit sector" (Salamon and Anheier 1997a:15).

The distinction between non-profit and for-profit rests largely on what may be termed the non-distribution constraint -- a non-profit organisation may not lawfully pay its profits to owners or anyone associated with the organisation (Hansmann 1987, Weisbrod 1988:1). In non-profit organisations there is no formal connection between an individual's financial interest in a venture and the power to select and control management. Various schema have been developed for describing different non-profit organisational forms (Hansmann 1987:28, Weisbrod 1988:59). One such scheme focuses on two organisational characteristics -- the source of income and the form of management or control. The "donative non-profit" relies primarily on donation income; the "commercial non-profit" derives its income primarily from the sale of goods or services to paying consumers (or third party insurers); the "mutual non-profit" is run by a board selected by the donor or consumer members; and the "entrepreneurial non-profit" is managed by a self-selected board (Hansmann 1987:28). For example, in the hospital sector in the United States the dominant form of non-profit organisation is the entrepreneurial/commercial non-profit.

Issues related to ownership and control are, however, contested. It has been argued that the dichotomy of public/collective versus private/independent is unhelpful and limited (Mintzberg 1996, Ovretveit 1996, Schlesinger et al. 1987, Seibel and Anheier 1990:9). There are privately owned organisations, whether closely held by individuals or widely held in the form of market traded shares. There are also publicly owned organisations, more correctly known as state owned, because the state acts on behalf of the public. Citizens no more control state organisations than customers control private ones. Mintzberg identifies two other types of ownership, "cooperatively owned" organisations and "non-owned" organisations. Cooperatively owned organisations tend to be controlled by their suppliers (e.g. agricultural collectives), by their customers (e.g. mutual insurance companies), or by their employees (e.g. Avis). What Mintzberg refers to as "non-owned" organisations are controlled by self-selecting groups of people, an ownership pattern typical of the third sector.

From the point of view of ownership, private and state organisations may have more in common with each other than they do with third sector organisations. Both private and state organisations are tightly and directly controlled through hierarchies, one emanating from the owners, the other from state authorities. The transition from one to the other is not necessarily as great as the classical private-state...