Analyzing the cost-effectiveness of managed competition: make or buy? That is the question many governments must answer in the ongoing quest to deliver high-quality services as efficiently as possible.

Extract

---

Analyzing the cost-effectiveness of managed competition: make or buy? That is the question many governments must answer in the ongoing quest to deliver high-quality services as efficiently as possible.

Editors's note: This article is adapted from the author's book, Using Competition for Performance Improvement: A Resource Guide for Practitioners Advising Governments and Not-for-Profits, Copyright 2001, American Institute of Certified Public Accountants, all rights reserved.

As a public finance professional, you are increasingly pressured to consider the most cost-effective method of service delivery. Whether you are facing budget balancing demands or concerns over service delivery performance, the pressure to provide the highest quality service at the lowest cost is a constant one. One of the most heralded tools for addressing this pressure is managed competition, the process whereby governments compete with private firms to provide public services. The underlying premise behind managed competition is that unlike the public monopolies that dominate public service delivery, competition among service providers--public and private--provides an incentive to control costs, respond quickly to change, emphasize customer satisfaction, and embrace innovation. (1)

Like other public policy issues, competition has both supporters and detr...

See the full content of this document

---