Municipal homes for care and housing were good in the acute refugee situation

In autumn 2015, nearly 35,000 asylum seeking children came to Sweden, and the need for HVB homes increased sharply. Many places were bought from private providers, but the largest increase in HVB places took place by the municipalities starting their own HVB homes.

Despite the sharply increasing demand for HVB places, profitability did not increase appreciably for the HVB companies, with the average operating margin increasing from 10 to 11 per cent in one year. Nor have we seen any general complaints about the quality of private HVB. On the contrary, the Health and Social Care Inspectorate (IVO) had several remarks on the municipal HVB homes that were set up for unaccompanied minors.

The Swedish Competition Authority does not believe that it would have been better if the municipalities had engaged private HVB homes to a higher extent. Since IVO did not have time for all of the applications for permits to start new HVB homes, the supply of places could not increase in pace with the increased demand. Announced procurements would have also taken far too much time. Many municipalities have already begun dismantling the HVB homes that were set up in 2015 and 2016, which shows that their own operations may be a flexible and suitable solution.

“Procuring operations in competition can often provide lower costs or better quality than municipalities running their own operations. But since it was not possible to procure HVB places in competition at the time in question, it was good that the municipalities also started their own HVB homes,” says Karin Lunning, Acting Director-General of the Swedish Competition Authority.

Alternatives to placements in HVB homes are placements in foster homes. However, there was a shortage of foster homes at the time in question, and many municipalities therefore engaged consultant support companies that assisted them in the work of recruiting, investigating and supervising foster homes. In most cases, the companies were engaged without being subjected to competition. The number of consultant support companies more than doubled and the already good operating margin at these companies increased from an average of 9 per cent in 2014 to 17 per cent in 2015. At the same time, the municipalities’ costs for foster home placement increased sharply, and many municipalities were dissatisfied with the quality of their services.

“This example shows that direct procurements that are done without being subjected to competition and clear requirements can lead to insufficient quality and unnecessarily high costs for the tax payers,” says Karin Lunning.

The report Market for homes for care and housing for asylum-seeking and other children and adolescents was written on behalf of the Swedish Government and contains the following suggestions:

• The Act on Systems of Choice in the Public Sector (LOV) should be adjusted so that it states that it is possible to procure HVB in accordance with LOV.
• Both private and public HVB should report financial results at a unit level.
• Follow-up and reporting of HVB should be improved and made more uniform.
• IVO’s processing times should be shortened.

Read the report 2017:8 (in Swedish)