Governments around the world are facing increasing pressures on all fronts. From Europe to Japan to the United States, the public sector has had to adjust to a new era of fiscal austerity at the same time as dealing with demands for better services and widespread calls to stimulate economic growth.
To meet such challenges, public servants have been incubating and hiving off independent organisations designed to provide public services by pursuing a mission of social value realised through a sustainable business model. Though diverse in organisational form and ownership model – from mutuals and cooperatives to community interest companies and social enterprises – they are all hybrid embodiments of the public, private and social sectors. For health and human services in particular, hybrid spinouts offer prospects of scale, performance and innovation that outstrip the well-known limitations of pure-play provision by any single sector.
Consider, for example, NAViGO, which provides mental health and social care services in North East Lincolnshire, England. NAViGO was spun out from the National Health Service in 2011 and is now a non-profit social enterprise owned by its employees. The organisation works closely with its service users to develop innovative solutions for reducing waste and increasing efficiency, and the result has been a business enterprise with fewer managers and less bureaucracy. For fiscal year 2012, NAViGO reported a surplus of £300,000 on revenues of more than £22 million, and the surplus was reinvested back into its operations.
Hybrid organisations can combine the best of the public, private and social sectors. They maintain a strong social mission to deliver various services that the private sector might not be interested in providing, and they rely on business acumen and entrepreneurship to lessen their dependence on government funding. Their goal is improved citizen services and wider economic benefits to the communities in which they operate. In practice, however, public spinouts can be difficult to create and just as hard to manage. How, for example, can they attract the talent they need? What kind of revenue streams should they pursue? Moreover, how can they increase their scale while remaining faithful to their core social mission?