Discussion paper

The prime provider model: an opportunity for better public service delivery?

12 Jun 2014

The University of Melbourne in partnership with the Brotherhood of St Laurence is developing a research program that aims to critically examine ‘ prime ’ or ‘ lead ’ provider models of public service delivery. This discussion paper forms part of the initial exploration and provides an overview of the factors driving the adoption of prime provider models, the current approaches that have been observed in Australia and overseas and a brief analysis of the perceived benefits and challenges. We also present four cases from the Brotherhood of St Laurence of the prime provider model in practice, reflect ing different policy areas and relating to different level s of government. From this discussion we set out a series of questions to guide the program of research.

Since governments began outsourcing services in the 1990s there has been considerable experimentation with different commissioning approaches. At a time of fiscal restraint and reductions in the size of the public sector, governments are exploring new service delivery models, particularly those that are seen to increase coordination in addressing complex policy problems, known as ‘ wicked ’ problems. One model that is receiving attention is the prime provider approach. This is an approach where government contracts with a lead or prime provider which in turn takes responsibility for organising and managing service delivery through a group of subcontractors or providers who are specialised and/ or local suppliers. Prime provider models operate in a range of health and welfare sectors. In Australia, a prominent lead provider model is the Communities for Children (CfC) initiative operating in 45 disadvantaged communit ies across Australia. Other examples of prime provider approaches in Australia include Headspace and Partners in Recovery.

The Brotherhood of St Laurence has been involved in developing innovative service models that operate within a prime provider framework. The prime provider models in Australia tend to be locally based, partnership - type approaches delivering services to a specific client group. Many have been initiated by community or not-for-profit organisations rather than being driven by government. In contrast, internationally, prime provider models have been driven by government and developed as large-scale, commercial contracts that have attracted significant interest from large, for-profit companies. For example, the estimated cost of the UK Work Programme is £3 billion to £5 billion over five years (Finn, 2013).

The perceived benefits of prime provider models for government include greater coordinat ion of local specialist providers, reduced administrative costs and enhanced opportunities for innovative service delivery resulting from economies of scale. The challenges for government in these approaches relate to the hollowing out of capabilities and provider or market failure. In addition, prime providers themselves are faced with challenges relating to managing potential risks and liabilities as well as contract and performance management. From the experience of the Brotherhood of St Laurence, some of the perceived benefits of prime provider models for the not-for-profit sector include the capacity to scale up innovative programs, opportunities for partnerships and collaborations with other organisations and communities, and enhanced capacity to garner community support and involve volunteers and service users in delivery.

The challenges for the not-for-profit sector lie particularly in reputational risk, the potential squeezing out of smaller not-for-profit providers in larger, commercial contracts that require a high level of capital, and managing changing expectations from government when public servants struggle to adapt to a new regime wherein knowledge gathering and service monitoring is predominantly undertaken by the prime. While there is evidence to suggest that some prime provider models ha ve resulted in better coordinated local service systems, for example CfC ( Muir, Katz, Edwards, Gray, Wise & Hayes, 2010), the empirical data on the effectiveness of the prime provider model overall is limited (Baulderstone & Earles, 2009; Earles & Baulderstone, 2012; Purcal, Spooner & Thomson, 2010). A research project involving a partnership between the University of Melbourne and the Brotherhood of St Laurence will examine prime provider models and explore a range of issues, including how these models affect the relationships between the actors in these service delivery arrangements. The aim is to gather empirical data relating to the effectiveness of prime provider service delivery models, in this emerging and as yet under - researched area

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