Cheap and Dirty: The effect of contracting out cleaning on cost and quality in English hospitals

Contracting out of public services, especially ancillary services, has been a key feature of New Public Management since the 1980’s and by 2014, over £100 billion of UK public services were contracted out annually to the private sector. A number of high-profile cases has prompted a debate about the value-for-money these contracts provide. Value-for-money comprises both the cost (efficiency) and quality (effectiveness) of the services. We empirically test the effect of contracting out in the context of cleaning services in the English NHS. Additionally, we present and test a new theory of coupling: the effect of contracting of ancillary services on the quality of core services using the hospital acquired infection rate as our measure. We find that private providers are cheaper and dirtier than their in-house counterparts using data from 2010/11-2013/14 for 130 English NHS trusts.