Service Provider

Service provider refers to all those organizational entities or individuals that are directly involved in the delivery of a vast range of services to clients, consumers, or citizens at private or public levels. The term refers to a variety of forms of ownership and structures; it is broad enough to encompass individual and organizational providers, governmental and nongovernmental organizations, for-profit and nonprofit entities, and professionals and nonprofessionals.

In many countries, the state remains the main service provider as it takes responsibility for the delivery of a sizable core of public services. However, the full picture of state service providers is characterized by a significant degree of diversity. At the two extremes, there are vertically integrated ministries and independent, state-owned enterprises. In between lies a diverse range of public bodies that differ in their organizational forms and their governance structures, among other ways. Analysts have distinguished between delegated service providers and devolved service providers. Delegated providers, while being direct subsidiaries of ministries, generally function under a quasi-contractual relationship with their reporting ministry. Devolved providers, on the other hand, are separate legal entities that enjoy a greater scope of autonomy and have their own governance structures. Both groups function under public law.

When the organizational provider is the public sector, the boundaries may be blurred between service provision and other key related functions, such as funding, purchasing, and regulatory responsibilities. Although all these functions may be assumed by a single entity, a clear distinction between them is one prerequisite for having clear lines of accountability and for providing for appropriate incentives for effective allocation and use of public resources.

Although public entities continue to offer a significant part of public services in most countries, recent changes in public administration have been marked by the efforts of states to reinforce their strategic, purchasing, and regulatory capacity while delegating the provision functions to private providers. Among the range of options available, public payers may contract with individual or collective private providers. In other cases, the service provision is completely in the realm of the private sphere and delivered by for-profit private providers funded through private insurance or out-of-pocket payments. With both options, the [Page 871]service provision is ensured by private entities that function under private law and have a fully separate legal identity from the state.

Alongside the public and for-profit private providers, there is also a third sector with a range of nonprofit organizations: faith-based organizations, associations, charities, and so on. In some countries, such as the Netherlands, a large part of education and medical services are delivered by these providers.

As has already been pointed out, service providers cannot be restricted merely to organizational entities. Nearly all services require individual providers that come into direct contact with clients (teachers, nurses, doctors, lawyers, etc.). Yet the attention paid to these frontline service providers should not cause us to overlook the contribution of a range of other groups largely playing a supporting role and making possible the delivery of services. Similarly, the primacy given to formal providers with extensive training and legal recognition conferred by licensure, registration, or certification should not divert attention from the range of informal providers, such as traditional healers, volunteers, or community workers, who also make a significant contribution, particularly to community-based support services.

...