Private foster-care agencies: Where government inefficiency, the free market and magical thinking collide

February 27, 2015

By Matthew E. Milliken
Feb. 27, 2015

On Thursday, Mother Jones published a lengthy look at private foster-care agencies, some of which are nonprofit, others of which are for-profit. The report is fairly alarming.

Brian Joseph, a former state government reporter for the Orange County Register and a former investigative journalism fellow at the University of California at Berkeley, produced the story. One of the problems he found is that there is little hard data on the safety or effectiveness of this entire business sector:

Squeezed by high caseloads and tight budgets, state and local child welfare agencies are increasingly leaving the task of recruiting, screening, training, and monitoring foster parents to these private agencies. In many places, this arrangement has created a troubling reality in which the government can seize your children, but then outsource the duty of keeping them safe — and duck responsibility when something goes wrong.

Nationally, no one tracks how many children are in private foster homes, or how these homes perform compared to those vetted directly by the government. As part of an 18-month investigation, I asked every state whether it at least knew how many children in its foster system had been placed in privately screened homes. Very few could tell me. For the eight states that did, the total came to at least 72,000 children in 2011. Not one of the states had a statistically valid dataset comparing costs, or rates of abuse or neglect, in privately versus publicly vetted homes.

“It’s troubling,” says Christina Riehl, senior staff attorney for the Children’s Advocacy Institute at the University of San Diego School of Law. “There are so many places where the government puts money to fix a problem without adequately checking to see if the money is actually fixing the problem.” Good data would make the system more accountable, Riehl says, but “data is a low priority because it’s difficult. How do you measure child safety?”

Unfortunately, Joseph found plenty of instances where safety was undeniably compromised. In Texas, where 90 percent of foster children are placed through private agencies, and where there is an effort under way to eliminate government-made foster placements altogether, at least nine children in private-agency homes died from abuse or neglect from 2011 through 2013. In other cases, children have been sexually assaulted or suffered permanent injuries from beatings that took place in homes where for-profit foster agencies whiffed on criminal background checks of people in the home or otherwise missed warning signs.

Conservative capitalism evangelists love to proclaim that the free market spurs innovation and efficiency, whereas hidebound government agencies tend toward bloat. But one of the experts whom Joseph interviewed noted that the financial model here — essentially, a set payment for each child placed in a foster home — seems to be counterproductive for this type of service:

Roland Zullo, a researcher at the University of Michigan who has studied foster care privatization, believes tragedies like these may be linked to the financial incentives of the industry, which he says are not aligned with child welfare. “This is just the kind of service where the market approach doesn’t work,” he says.

The bottom line for private foster care agencies—whether large, for-profit corporations or small, local nonprofits—is tied to the number of foster parents on their roster, and thus their ability to place children quickly. Given that every foster parent represents potential revenue, Zullo says, an agency may be more likely to overlook sketchy personal histories or potential safety hazards. There’s little incentive, he adds, to seek out reasons to reject a family, to investigate problems after children are placed, or to do anything else that could result in a child leaving the agency’s program. And as tough as the margins are for nonprofit agencies, the perverse incentives are exacerbated at for-profit agencies that need to make money for owners or shareholders.

“What happens,” Zullo says, “is the lives of these children become commodities.”

In one case in California, a 4-year-old boy fell into a pool at his foster home after wandering away unnoticed; he wound up with permanent brain damage after being resuscitated. At the time, the foster mom apparently had 12 children living in her four-bedroom home, four of whom were fosters.

A private agency named Approachable had placed the boy and his three siblings in the house. Its home-safety inspection, which the foster mom herself described as cursory, left a number of potential hazards unaddressed, including the fact that the backyard pool was uncovered and surrounded by an unlocked fence. The state fined the organization all of $500.

Writes Joseph:

Michael Weston, a spokesman for the California Department of Social Services, bristled when I asked why the state didn’t penalize Approachable more. “Can we shut down agencies? Of course we can. But it’s not necessarily always in the best interest of everyone involved.” Why not? “There’s not a huge group of people trying to be foster parents right now, and that’s a challenge — finding enough homes.”

And that’s kind of the crux of the problem: There aren’t enough foster parents.

This topic has two things in common with my post on Thursday about government eavesdropping on cell-phone communications: That the item was prompted by a story in Mother Jones and, unfortunately, that there is no easy solution. Increase the incentives for people to become foster parents — that is, boost the pay — and social service agencies will attract people who want to be foster parents for the wrong reasons. (I should probably say that by doing that, social services agencies will attract even more people who have self-interested reasons for wanting to become foster parents.)

But leave the incentives as they are and, well, we’ll just have the status quo — a system in which plenty of children are needlessly killed or harmed. And de-privatizing (is that a word?) the foster-care system is no guarantee of improvement, either; one reason that conservatives love to preach about government ineffectiveness is that, all too often, it’s a serious problem.

No, I don’t know what to do about this situation. But I hope that Joseph’s investigation gets people talking about the issue. And I hope that states reconsider privatizing government functions just for the sake of claiming that market efficiency will magically solve everything.

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