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State and Local Government / Transparency

Privatization Brings Efficiency, Savings, and Quality

By Eric D. Dixon on Aug 30, 2007

At the risk of making it seem like this blog is now all David Stokes, all the time (as though that would be a bad thing), we’re pleased to announce the publication of David’s new case study, "Saint Louis County, Drugs, and Competitive Bidding: A Privatization Success Story."

St. Louis County privatized its pharmacy services a few years ago in the face of spiraling costs, and the transformation was remarkable. Pharmacy spending had outstripped budgets consistently for years, until privatization began — and in that first year, costs suddenly dropped below budgeted figures. The downward trend in costs continues, and pharmacy services are now coming in under budget consistently even as the budgets are lowered in response to the existing savings.

Take a look at the graph on page 4. Its numbers show a stark difference, made all the more striking when presented visually. It demonstrates that when done right, utilizing market alternatives to public policy problems can bring renewed efficiency, savings, and quality to taxpayers. A lesson like this bears repeating.

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Eric D. Dixon

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