Do Public Health Service Characteristics Matter? Exploring the Make-or-Buy Decision in Local Health Departments

AbstractPublic health services can be provided by local health departments (LHDs) or external contractors. This study aims to determine which characteristics of public health services, if any, influence the contracting out decision in local health departments. The transaction cost approach, market failure theory, and government failure theory provide theoretical frameworks for how two characteristics of public health services—asset specificity and service measurability—could impact the decision to make or buy in local health departments. This study employs a multinomial logistic regression model for analysis and uses multiple data sources. The findings suggest that public health agencies are less likely to deliver services internally at low and high levels of transaction costs, while more likely to produce services in-house at moderate levels of transaction costs. Furthermore, for services that are difficult to measure vendor performance, LHDs are less likely to choose complete contracting.Keywords: Contractinghealth carelocal health departmentoutsourcingmake-or-buypublic health Disclosure statementNo potential conflict of interest was reported by the author(s).Data availability statementThe data that support the findings of this study are available in https://www.naccho.org/resources/lhd-research/national-profile-of-local-health-departments.Notes1 To mitigate dropout bias, we took several measures. Initially, the survey underwent a pretesting phase involving two colleagues, which enabled us to enhance the questionnaire’s clarity. Additionally, we sent out reminder emails after the first invitation email, emphasizing the significance of participants’ input and the compensation offered for their time. We received some auto responses indicating that individuals were out of the office and unavailable for contact, due to reasons such as summer vacation, job transitions, or retirement, during the four-week survey window (late June to late July 2023). Ultimately, 24 public health experts participated in the survey, with 20 completing the questionnaire. Despite including only 39 out of 85 services, the questionnaire spans eight pages and has sixteen questions. As a results, dropouts occurred during the survey. Two individuals discontinued at Question 2 (screening for disease/conditions). One participant dropped out during Question 4 (maternal and child health). And one respondent exited the survey at Question 5 (other health services). In general, we’ve taken efforts to make more people respond and lessen the dropout bias.Additional informationNotes on contributorsTianshu (Tina) ZhaoTianshu (Tina) Zhao is an Assistant Professor of Public Policy and Administration at California State University Long Beach. Her research focuses on public and nonprofit management, local health department management, health policy, government contracting, multi-sector collaboration, and survey methodology.