Abstract

Background: Currently in Spain, there is an intense debate and uncertainty about the functioning of public contracts after the approval of the recent National Law and its corresponding laws at regional level. State and different regions are adapting their ways to contract public services following the EU directives. Several new features are coming in long-term care public contracts: public contracts will be subject to social conditions; and there is a specific public contract for non-profit entities called concerted action agreement or social agreement (instead of subsidies).

Because of these legislative changes, Valencian Region government is also reforming its long-term care law through the "Reorganization Plan for residential sector at the Valencian Region". From an economic point of view, it is worrying how the new design of these public contracts in social services for older people in the Valencian region will affect the functioning of these services.

Objective: To study the possible effects in terms of efficiency (public contracts volume, competition and business concentration in residential field, public prices and places in residences) that these public contracts and social services regulation changes will generate on the management and financing of the Valencian residences.

Methods: Review of the regulations on public contracts and long-term care in Spain and Valencian Region (2015-2018). Consultation and analysis of public contracts information celebrated in Valencian Region residences field. Moreover, a revision of Spanish Long-Term Care data (Sistema de Dependencia) about residences.

Results/conlusions: Efficiency side results are ambiguous because although more companies enter competing, there continues to be business concentration and market dominance by few and large companies; the prices contracts are equal for all but the social clauses take relevance in the decision of contracts. In addition, the new economic benefits introduced by the “Plan de reordenación (reordering plan)” slightly streamline waiting lists in residences. Finally, there is an approach in the financial treatment between entities with and without profit, and a greater access of the older people to the economic benefits linked to the residential services, that are more favorable for those older people with lower incomes.