The evolution of organizational forms; a comparative analysis of institutional developments, privatization and for-profit opportunities in elderly housing in the Netherlands

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The evolution of organizational forms; a

comparative analysis of institutional developments,

privatization and for-profit opportunities in elderly

housing in the Netherlands

Master Thesis

Master International Business & Management

Tjibbe Stienstra S2218313

t.stienstra.1@student.rug.nl

University of Groningen Faculty of Economics and Business MSc International Business & Management

August 2014

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L

IST

of tables

Table 1: The model of institutional change (Greenwood et al. 2002) 16

Table 2: which data to be analysed per research question 22

Table 3: Case study elderly housing organisations 23

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List of figures

Figure 1: Research design 12

Figure 2: The different phases of institutional change (Greenwood et al., 2002; Parkhe, 2003) 20 Figure 3: Population prognosis NL personen = amount of people, leeftijd = age (CBS, 2010) 28 Figure 4: Decline of men and women in ENH 2000-2010 (CBS, 2010) 30 Figure 5: Total expenditures on care in the NL 2001-2011. (CBS, 2013) 31

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Abstract

The aim of this research is to get to know more on the institutional developments in elderly housing in the Netherlands and how this has led to privatization of elderly housing organizations. The purpose is to identify the different phases of institutional change and therein to see which phase the elderly housing organizations are in now. In order to research institutional change in individual elderly housing organizations an exploratory research was performed. Semi structured interviews were taken in a case study approach on four Dutch elderly housing organizations. Two are non-profit

organizations and another two are for-profit organizations. With the help of the model from

Greenwood et al. (2002) on institutional change, the results showed that elderly housing organizations are in the theorization phase. It became apparent that there are differences between non-profit and for-profit elderly housing organizations, in how these theorize an institutional change. Furthermore, as the majority of research on institutionalism is on organizational fields, this research on individual

organizations reveals that these organizations can have an influence on the institutional change as well. Services and in some cases care are becoming privatized, but as of yet not fully institutionalized. A future research should reveal how privatization develops in the diffusion and re-institutionalization phase in the model of Greenwood.

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Abbreviations

AOW Algemene Ouderdoms Wet = General Law for the Elderly to get a social wage AWBZ Algemene Wet Bijzondere Zorg = General Law for Social Assistance

CIZ Centrum Indicatiestelling Zorg = Centre for diagnosing the care needed ENH Elderly & Nursing Home

IGZ Inspectie Gezondheids Zorg NL Netherlands

PGB Persoons Gebonden Budget = Personal Budget to buy care US United States

VPT Volledig Thuis Pakket = A care at home package VWS Volksgezondheid Welzijn & Sport

WMO Wet Maatschappelijke Ondersteuning = Law for Societal Assistance ZZP Zorg Zwaarte Pakket = Care Package that suits severity of situation

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The evolution of organizational forms; a comparative analysis of institutional developments, privatization and for-profit opportunities in elderly housing in the Netherlands.

1 Introduction

1.1 Background of the study

The older we become the more difficulties day to day life brings as a higher age normally comes with chronic diseases and other medical issues that eventually lead to intensive care (Anderson and Hussey, 2008). This in effect increases the use of long-term care facilities (Coyte, Goodmin, and Laporte, 2008). However the number of intramural elderly housing organizations is declining. Since 1990 and onwards large elderly and nursing homes (hereafter referred to as ENH) are disappearing in the Netherlands (hereafter referred to as the NL) and smaller profit organizations are replacing them, where non-profit housing foundations are looking for new ways for their business to survive (Arbeid in zorg en welzijn, 2009). One of the main reasons that leads to this institutional change is

privatization of this industry. Privatization occurs when there is a clear expansion of private-sector roles (Asher, 1987). This means an increase in for-profit organizations, decline of and other changes in non-profit organizations.

These elderly housing institutions were long seen as a source of stability and order. This is explained within the institutional theory, as it is about the enduring equality in character of institutions. The forming of such an institution is the process of institutionalization. Institutionalization means that something (a concept, mode or behavior) becomes implanted into an organization, society or social system (DiMaggio and Powell, 1983). However, this source of stability and order now seems to have found its turning wheel as privatization causes for institutional change in the Dutch elderly housing industry. As this process of institutional change might take years or decades to develop more information is needed on whether there is a model that helps describe how privatization is changing the Dutch elderly housing.

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In the NL, privatization of the elderly housing market used to be minor as the government was the main provider and kept a significant influence in this industry. But now that neo-liberal politics is gaining popularity in the NL, the profit view grows. Also, as the population of the NL is ageing and people live longer, this increases health expenditure as a percentage of GDP. In the NL this has reached a point that the government cannot bear the costs of this ever expanding welfare state. Large non-profit institutions (ENH) are changing their philosophy and policy as the budget is shrinking. In effect non-profit elderly housing organizations are implementing new ideas, while the market opens up for-profit elderly housing. At this point there has not been much research on what institutional change makes privatization in for-profit and non-profit Dutch elderly housing expand. There are likely explanatory factors that include social, political and technological factors which reflect institutional change, but no research has been performed on the change in for profit and non-profit Dutch elderly housing organizations and if there are differences between them. This research will give more insight into how institutional change occurs in individual firms, specifically looking at elderly housing organizations.

With the help of different case studies of elderly housing organizations in the NL a comparison is made whether institutional changes in the NL gives grounds for privatization in elderly care/housing in the NL.

1.2 Research Question

When the foregoing is combined with the fact that ageing is a worldwide phenomenon (Worldwide Ageing Society List, 2013), it leads to the following research question:

How does institutional change affect individual for-profit and non-profit Dutch elderly housing organizations, what differences exist between them and what influence do they have on this institutional change?

To answer the main research question the following sub-questions will be answered.

- What are the demographic developments of the population?

- What social, political and technological developments are taking place in elderly care/housing?

- What similarities and differences exist between the for-profit and non-profit elderly housing organisations?

1.3 The Research objectives

This research is performed to enhance current knowledge in management theory. By studying the different factors that account for an institution to develop or change it is meant to obtain new

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practical recommendations that are taken from this research can be used in elderly housing

organisations in an attempt to improve their performance. The fast changing institutional environment of elderly housing organisations has often been researched on the level of the organizational field, while this research wants to discover how institutional changes increase privatization in individual elderly housing organizations. Thomas (2004) made a model that helps to organise academic problems in which the problem described could be set as a stabilisation problem. According to Thomas (2004), what seems to be stable and unchangeable is actually changing and unstable. The report “Prachtig boven tachtig” from DTZ Zadelhoff (2012) shows that there is no stability regarding the industry of elderly housing and therefore these institutional changes have a need for further research. The second problem is created through the coexistence of government funded regular- and for-profit elderly housing. Thomas (2004) describes organisations that look like they cannot exist together, actually can. The Dutch healthcare system is based on welfare. Making profit on care and therefore elderly

care/housing does not make for a legitimate business in the NL. As this topic also has a lack of research, this study will try to fill the gap in the literature on the connection between legitimacy and for-profit elderly housing.

1.4 Research methodology

The problem statement in this thesis asks for an exploratory research. For this exploratory research a qualitative research method was chosen. With this qualitative method the goal of this research is to study whether institutional developments in the NL create an opportunity for privatization in non-profit and for- non-profit elderly housing. In order to get a better understanding on privatization within Europe and on the theory that encompasses institutional change, an extensive literature review was done. In order to visualize the literature, a conceptual model displays the relation between the different concepts that encompass the theory. Based on this conceptual model a semi-structured interview was set up. Four case companies were interviewed to supply the data needed to answer the research questions. The analysis of the interviews, the extra documentation and the results are discussed and recommendations are given for future research. A more detailed presentation of the methodology can be found in Chapter 3.

1.5 Thesis outline

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institutional change by reviewing precipitating jolts and the destabilization of Dutch elderly housing institutions. Chapter 5 continues by analyzing the case study companies based on the theory from chapter 2. In chapter 6 the discussion summarizes the main findings. If these are different from the original model an adjusted conceptual model will be composed and propositions will be set up for further testing. Chapter 7 will give a brief summary, contributions and implications, limitations of this research and recommendations for further research. Figure 1 shows schematically how this research is

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2 Literature review

2.1 Introduction

To get a better understanding of the role of institutional influences on the evolution of elderly care/housing, the following literature review will explain more about the relevant theories and concepts. A short introduction is given about the institutional theory in organizational sciences, explained in section 2. Section 3 will help explain how an institution can be analysed. Section 4 is about the difference between non- and for-profit management in institutionalism. Hereafter, section 5 and 6 will discuss institutional change and a model on how to comprehend such changes. Section 7 will discuss the importance of regulating institutions in the theorization process. Section 8 reviews the power of legitimacy in the role of institutional change. Section 9 is about the influence that

professional associations have on developments in a certain industry. Section 10 visualizes the fundamental ideas of this research in a conceptual model. Section 11 will finalize the literature review with a conclusion. Altogether this makes a theoretical background which will help study institutional changes in this research on elderly care/housing in the NL.

2.2 Institutional theory in organizational sciences

In organizational science, where organizations are the subject of study, Selznick (1949), Simon (1950) and Parsons (1960) were the first to talk about institutionalism. Selznick specifically focused on organisations, Simon looked at restricted rationality within organisational structures and Parsons studied the normative influences from the environment. The concepts of institutions and

institutionalisation have thus been defined in many ways.

2.3 Institutional analysis

The institutional theory has different levels of analysis for researchers to use. For instance, Oliver (1997) describes that the institutional theory shows that institutional activity is the result of processes that are connected with each other on an individual, organisational and inter-organisational level of analysis. On an individual level the norms, habits and unknown factors are in accordance with the tradition of the manager and its opinion on institutional activities (Berger & Luckmann, 1966). On the level of the organisation; institutional structures and behaviour are supported by the culture of the company, a shared ideology and political processes. Lastly, on an inter-organisational level the pressure from the environment like the government, expectations from society (like rules, norms and values about product quality, occupational safety or environmental management) call for socially accepted behaviour. This industry of elderly housing is such an industry that institutionally needs to be analysed on an inter-organisational level.

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isomorphism and collective rationality in organizational fields”, where they define three mechanisms in which institutional effects are being explained on an organisational field. They explain the

organisational field as the total amount of organisations, that together form an institutional life of itself. This gives reason to believe that homogeneity is created in working with the organisation environment, which is called isomorphism (DiMaggio & Powell, 1983). Isomorphism can be applied in three forms, being; coercive, mimetic and normative isomorphism. The mechanism is coercive whenever isomorphism is the result of political pressure, laws, accreditation processes and legitimacy. Furthermore, mimetic isomorphism comes into play when uncertainty is causing homogeneity. Lastly, normative isomorphism is being caused by professionalization in which professionalization means: establishing mutual conditions and methods in which control can be practiced upon the productivity (Larson, 1977).

DiMaggio and Powell (1983) call the spread of institutional effects a process of isomorphism, as it is seen as an important result of competitive as well as institutional processes. Isomorphism stands for equality, the social pressure in a certain industry is the same for every organisation in that industry and causes that firms develop the same structures and activities (DiMaggio & Powell, 1983). Within the institutional theory, an extensive amount of the research on isomorphism has been done on the aspect how enterprises and public organizations deal with bureaucracy in modern organizations (Tolbert & Zucker, 1983, Baron et al., 1986). Tolbert & Zucker (1983) concluded in their research that

organisations take over the policy of each other more and more and that this policy becomes institutionalized. Baron et al. (1985) confirmed the research of Tolbert and Zucker (1983) and continued that the first stage of diffusion, the spread of new organisational uses, is closely connected with internal functional requirements.

2.4 Institutionalism and non- or for- profit management

All three forms of isomorphism in combination with organization policy, uses and legitimacy therein are relevant for the industry of elderly care. However, the majority of the research on institutionalism is on organisational fields or industries, whereas this research will focus on individual organizations that are divided in for-profit and non-profit business types. For example whenever privatization is supported within a country and the for-profit companies have a strong reputation for competitive advantage, the non-profit companies may copy the for-profit design and management. On the other side whenever non-profit prevails, the for-profit organizations may mimic them. Normative isomorphism may develop when certification, critical staff shortages, and growing caregiver

professionalization strengthen elderly housing organizations to accept identical staffing patterns and strategies (Estes and Swan, 1994).

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like mission statements and ideologies of the board of directors that direct the non-profit organizations to a different approach. An example would be that non-profit organizations are constrained in their approach towards handling any excess demand with waiting lists. While for-profit organizations have more freedom to work with a pricing structure (Weisbrod, 1988).

Now that differences between for-profit and non-profit organizations will need further research in the industry of elderly housing, the next section on institutional change will give more insight on

developments and changes in institutions.

2.5 Institutional change

Institutions were long seen as a source of stability and order. This is explained within the institutional theory, as it is about the enduring equality in character of institutions. Oliver (1992) and Scott (2001) put emphasis on the creation of new institutions and on the converging processes of change. The researchers started looking for arguments and situations that tell more of what causes institutional change. Oliver (1992) did research on how the dynamics of institutions have their effect on the weakening or disappearance of institutions. The focus in this article is on deinstitutionalisation and how existing institutional bodies fade away because of the adjustments in regulation. Scott (2001) explains the importance of deinstitutionalisation as these changes are a natural phenomenon that comes with new beliefs and practices.

Oliver (1992) identified three important sources that influence institutional norms and values, on an organisational as well as an environmental level. These three sources are functional, political and social sources. These sources are considered to be the cause of the deterioration of institutional

behaviour and therefore the beginning of a process of deinstitutionalisation. Oliver (1992) was the first to do research upon institutional activities that look stable, but are in fact eroding, destabilising or disappearing. Other researchers have also picked up on this movement in the institutional theory and found deinstitutionalization, re-institutionalization and institutional change as the subject of their research (these include; Hoffman, 1999; Greenwood et al., 2002 and Thornton, 2002). Institutional change is the main focus in the institutional theory (Dacin et al., 2002).

These sources for institutional change may explain why government funded elderly care/housing institutions have either disappeared or deinstitutionalized in the NL. While at the same time, new for-profit elderly housing organizations use this institutional change and re-institutionalize in Dutch society today. The next section will explain more on the stages of institutional change, visualized by a model that can also be used to study the elderly housing industry.

2.6 A model of institutional change

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(1996) made a similar model before Greenwood et al. (2002) in which institutionalization and

institutions were researched with a close look to all the processes. By modelling institutionalization in such a way, Tolbert and Zucker were able to view the process of institutionalization and extended the theory of institutionalisation with the aspects which have an influence on the dynamics of institutions and the normative influences on decision making in organisations. The model of Tolbert and Zucker (1996) has been an exemplary concept which formed the basis for the one of Greenwood et al. (2002).

Nr. Phase Explanation

1 Precipitating jolts Social, technological or changing rules will destabilize institutions

2 Deinstitutionalisation Existing socially constructed ideas lose their meaning. New actors enter the field and existing actors eventually dissolve or there is the possibility of institutional entrepreneurship. 3 Pre-institutionalisation Ideas are introduced and therefore the first steps of change are

introduced. Organisations will independently change and adapt themselves to local circumstances.

4 Theorization Possible problems will be defined in such a way that solutions can be coupled to these. This process is justified in the line of legitimization.

5 Diffusion Diffusion can be recognized based on the spread of new ideas within organisations. Sooner or later the best innovations are recognized and therefore mimicked in the organisational field. 6 Re-institutionalization Those ideas that are completely institutionalized are those that

are completely institutionalized and seen as the new way of handling things.

Table 1: The model of institutional change (Greenwood et al. 2002)

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The central themes in the model of Greenwood et al. (2002) are theorization and legitimacy (Parkhe, 2003). These will be explained further in the following sections.

2.7 Theorization

Greenwood et al. (2002) explained the importance that regulating institutions have in the theorization process. The reason for this is that these institutions form and reproduce shared intentions and make agreements happen (Ruef and Scott, 1998). The process of theorization has been studied by multiple researchers (Suchman, 1995; Tolbert and Zucker, 1996; Strange and Soule, 1998). Tolbert and Zucker (1998) first critique was that not enough attention was paid on conceptualising and specifying of the processes. The transition between pre-institutionalisation and full institutionalisation is not fully identified. Strang and Meyer (1993) made clear in their article that new habits can only be spread whenever these are first theorised. In which they define theorization as ‘the assertive development and specification of abstract categories and the formulation of relations in patterns that include cause and effect relations’ (Strang and Meyer, 1993). According to Strang and Meyer, theorization is seen as a strategy that gives meaning to actual events. The level of theorization can have an effect on the spread of solutions. Strang and Meyer believe this leads to a focus on theorists, like scientists, intellectuals, policymakers and professionals, which together create the process of theorization. These theorists have their influence on the diffusion of ideas between organisational fields and the global environment. Support is created by other actors like government authorities, large united actors and politics. A model makes the transition of theoretical formulation into a social movement that in effect makes a concept that becomes institutionalized. Within the organisational field, individuals as well as

organisations will identify themselves with such a social concept and adapt this in their local situation (Strang and Meyer, 1993).

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emulation. Herein organisations react on organisational failure by copying the most successful organisation in the near environment.

Tolbert and Zucker (1996) continue the discussion on theorization by extending the views of Strang and Meyer (1993) with two important tasks for organisations going through institutional change. The first task is specifying general organisational failure. A local innovation can be a solution or treatment to the problem that an organizational field is experiencing. For this task, the public recognition needs to be collected that entails a uniform pattern of dissatisfaction about organisational failure. The second task is the justification of the possible innovation. This task will deal with the formulation of theories that are able to analyse the causes of organisational failure. These theories are in effect unifiable in order to come up with a solution to the problem (Tolbert and Zucker, 1996).

Greenwood et al. (2002) emphasize that theorization is especially important in those settings that are highly structured. The organisation around elderly care/housing can be accounted for being a structured setting and can be associated as a professional setting. Furthermore, most research on institutional change focuses on the entire industry while in this research individual companies will be studied upon. Especially in this phase it will be interesting to discover whether the developments of theorization obstructs for-profit or non – profit organizations or if they are able to provide it with a contribution. If so, another point of interest will be to see how this would go in practice and if the for- profit or non-profit organisation would have more influence on this phase of theorization.

2.8 The power of legitimacy

Theorization is an important phase in institutional change as it makes the connection between central concepts in institutional theory, like assigning legitimacy (Greenwood, 2002). Suchman (1995) is one of the leading theorists when it comes to the subject of legitimacy. The definition of legitimacy from Suchman (1995) is;

“Legitimacy is a generalized perception or assumption that the actions of an entity are

desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.” (1995, p. 574)

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institutionalism, legitimacy causes organisations to create consensus about rules and laws, normative support or cognitive cultural frameworks (Scott, 2001).

The environment tends to have a different opinion on social legitimacy depending on whether a service or product is made in a non-profit or a for-profit organisation. Non-profit organizations tend to be considered more trustworthy as the cultural environment shapes the service quality, which makes non-profits displayed as ideologically and operationally distinct from for-profit organisations (DiMaggio & Anheier, 1990). Organisations that only have a for profit view on doing business are often evaluated with below average service quality (Fitzsimmons, 2006). This makes that the institutional standing of the organisation is mostly determined by societal constituents and the judgement of the general public (Baum & Oliver, 1991).

2.9 Professional associations

In this study the focus is laid on the developments in elderly care/housing, in which different actors such as associations can be of influence. Associations have shared rules and characters, recognized by categories of social actors, their activities and relations (Barley and Tolbert, 1997). According to Washington (2004), professional associations and interest groups are the subject of research in the study on institutionalism. Washington (2004) did research on the other type of professional

association, the interest groups. Herein, interest means that it stands up for the rights or interests of the customers, in this case the elderly people. One of the characteristics of an interest association is that it is more involved in increasing the amount of members than increase savings on expenses. In this study the focus will be on the role of professional associations in the process of institutional change within elderly care/housing. According to Greenwood et al. (2002), professional associations have an important role in the process of legitimacy because these associations tend to be regulating entities. Regulating entities like the government and professional associations have a considerable influence on the theorization of institutional change, because by taking the decisions together, both take

responsibility for the outcome (Ruef and Scott, 1998). Regulating entities are the parental support of institutions. According to Greenwood et al. (2002) there have been several researches upon the influence of regulating entities which is most often the government on the process of

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2.10 Conceptual model

In order to get a clear picture on the fundamental ideas in this research, a conceptual model was made, based on the literature written in section 2.1 up to section 2.8. The model in figure 2 envisions the process of institutional change according to Greenwood et al. (2002) and Parkhe (2003).

Figure 2; The different phases of institutional change (Greenwood et al., 2002; Parkhe, 2003)

2.11 Conclusion

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3 Methodology

3.1 Introduction

The goal of this research is to get to know more on privatization and extend the theory on institutional change in for-profit and non-profit Dutch elderly housing. A qualitative approach was chosen as this way of doing research describes and explores subjects that have not been researched before or when little is known about the subject (Cooper & Schindler, 2011). This chapter will continue by explaining what methods are used in this study, starting with the research design, continuing with the population, introduction to the case study organizations, data collection, operationalization of the interview, method for data analysis and limitations.

3.2 Research Design

The model of Greenwood et al. (2002) was previously used on groups of organisational fields. In this research the focus is on individual organisations within elderly housing. In order to evaluate individual elderly care/housing organisations in the NL, the case study approach was chosen for a research design. This case study will be an exploration research on institutional change of elderly housing in the NL. Yin (1989) defines a case study as;

“An empirical inquiry that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used.” (1989:23)

As this case study is performed to test as well as build on the existing theory, it will be of an exploratory kind. Case studies can create theories that are innovating and use concepts that are strongly validated as they stand in close contact with empirical reality (Eisenhardt, 1989). Yin (1981) mentions that an exploratory case study consists of the following;

A. An accurate rendition of the facts of the case

B. Some consideration of secondary explanations of these facts

C. A conclusion based on the outcome that appears to be most in harmony with the facts. Elderly housing was chosen as the subject for this research because of the institutional changes which are happening in this sector in the NL and how this relates to privatization of this industry.

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associations. Secondly, Greenwood researched professional associations, whereas elderly housing in this research is focussing on individual organizations. Professional associations will be researched in detail through multiple practical experiences in the case study. By comparing the results from this research with the case from Greenwood et al. (2002), differences might appear that will be further reviewed in the discussion.

RQ Data

- What are the demographic developments of the population?

Do a demographic study on ageing on Dutch society and what types of elderly housing are offered. The database of www.cbs.nl and website

www.kcwz.nl holds a lot of useful material.

- What social, political and technological developments are taking place in elderly care/housing?

The precipitating jolts; this is the first phase of the model of Greenwood et al. (2002). Data is collected through news articles, CBS and KCWZ.

- What similarities and differences exist between the for profit and non-profit elderly housing organisations?

As two for profit and two non-profit elderly housing case studies are interviewed, a

comparison between both will give information that explains any similarities and differences. Table 2:Which data per research question

3.3 Population

With a case study a certain amount of cases is researched intensively in order to gain more information to build on the existing theory (Eisenhardt, 1989). Therefore four elderly housing organizations were selected to get understanding about non-profit as well as for-profit elderly housing practices, in order to develop knowledge about these fields. With the use of multiple case studies, the organizations can be compared so that differences and similarities can be observed (Thomas, 2004). The outcome of the

multiple case studies can then help to extend existing theory (Eisenhardt, 1989). Eisenhardt (1989) describes that for a multiple case study, in order to be sufficient, a total of four to

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3.4 Introduction to the Case Study Companies

3.4.1 Introduction

The following organisations in elderly housing have been interviewed.

Non-profit For-profit

Stichting Humanitas (Rotterdam Alexander) Martin Heeffer (regional director Pr. Alexander / Cappelle aan den Ijssel)

Nova Zembla Zorg (Oegstgeest) Hans den Hartog (director)

Zorggroep Drenthe (Assen)

Wierd-Jan Hofstede (policy officer)

Valuaszorggroep – Boarnsterhim State (Oldeboorn)

Erik van den Boom (Eigenaar Valuaszorggroep) Table 3: Case study elderly housing organisations

3.4.2 Non-profit foundation Humanitas

Humanitas is a non-profit foundation founded in 1959 which offers high quality care and services to elderly that mainly live in the region Rijnmond. Humanitas is offering housing, personal wellbeing, care, nursing and medical treatment. Humanitas has a total of 25 locations, around 4000 clients and 2000 employees. Humanitas provides housing to elderly in all life stages.

Humanitas’ mission is to strive for the ‘quality of life’. Eventually, all human beings search for ‘the quality of life’. Housing, care and wellbeing are connected to this non-profit foundation.

To ensure ‘the quality of life’, Humanitas vision is to take away the negative side effects of care in general. This includes no white jackets for personnel and no hospital regime. The other side of the organisation is that the housing for the elderly is sustained for all life stages, so that the elderly can accrue ultimate wellbeing while staying in their own home.

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3.4.3 Non-profit foundation Zorggroep Drenthe

Zorggroep Drenthe (hereinafter referred to as ZGD) is originated in 2007 through a merger of six different ENH in the Dutch province of Drenthe. Together ZGD provides care at home, personal care, nursing, guidance, treatment and intramural accommodation. Intramural care is provided to a total of 517 people of which 387 live in an elderly home and 130 in a nursing home.

The mission of ZGD is to ‘offer customized service to the elderly’. The vision therein is that; ‘their professional employees understand that the needs and wants of the elderly are a central goal, as well as having understanding in perceiving these goals’. ZGD strives for their clients to live independent and customized to their needs and wants as long as possible, may that be in their own home or in the elderly/nursing home.

3.4.4 Nova Zembla Zorg– The white house (For-profit elderly housing)

Nova Zembla Zorg (hereafter referred to as NZZ) its mission is to offer professional and close contact care to elderly with the vision that the elderly person is central in all aspects of being a human being and becoming older therein. NZZ owns two residences in the town of Oestgeest (the NL). The target group is not only elderly, but also those who need 24/7 care or are in the final stage of their life. Care provided to the clients is small scale and adjusted to the needs and wants of the clients. Prices for the rooms differ because of size and location. The amount paid is inclusive for housing and service costs and the costs for additional services and care.

The residence that is called The White House is positioned in an afforested area in Oestgeest, where more large residences are located. The residence was built in 1901 and was initially used as a hotel. In 2011, the residence was rebuilt to its original style. It now offers 25 private rooms which have their own bathrooms, shower, toilet and terrace. The rooms can be furnished by the elderly themselves and elderly couples have the possibility to live together in one room. The communal living room is used for dining. (www.novazemblazorg.nl)

3.4.5 Valuas Zorggroep – Boarnsterhim State (For-profit elderly housing)

Boarnsterhim State is a small scale live and care facility for elderly. The big difference with other elderly housing / facilities is that living and care are already separated in this building. The residence is located in an old farm that, after reshaping, was transformed into 14 apartments. Apartments range from 38 to 65 square metres and all have a separate living/bed and bathroom, while also having a fully equipped kitchenette. The apartments can be used for a long stay or for the purpose of a care hotel, where elderly can recuperate before moving back to their own home.

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developed for the elderly to stay independent as long as possible, while living the life that the elderly were used to do, before moving in to Boarnsterhim State.

3.5 Data Collection

According to Cooper and Schindler (2011), there are three different methods to do field research. These are the analysis of generally accessible field documents, an open or topic interview and

observation through participation. The first two methods will be used in this research. Information will be gathered from general available sources such as reports from the Social and Cultural Planning Bureau, as well as other research papers, annual reports and documents that describe the policy. These also include publications from the government, interest groups and advisory groups. Next is the interview from which the textual data provides a proper background. This for a better understanding of the institutional change in elderly housing and the influence of different actors in the process of an organisation which is going through these developments. The parties concerned include two non-profit and two for-profit organisations in elderly housing.

Four respondents in four elderly housing organisations were interviewed. The respondents are either one of the directors or a member of the higher management within the firm. In an interview with open questions (to be found in the appendices), the respondents were asked to give their view on the developments that institutional change in elderly housing has set forward from 1990 and onwards. It continues with their opinion on how much influence the identified actors had in the process of institutional change. The interview ends with how they act on the developments in for-profit elderly housing, as well as reviewing future plans of the organizations.

Background information in combination with the theoretical basis is used to determine the questions for the interview. The average time taken for the interview varied between 45 -60 minutes and all interviews were recorded in order to work out answers afterwards. Whenever there was a comment from the interviewee, this will be noted in the case description.

3.6 How to operationalize

To measure the concepts from the literature, they are converted into indicators and these indicators into relevant questions. The answers given are connected back to these indicators in such a way that they can be translated back to the theory. This form of connecting the theory with indicators has been used in the preparation of the interviews and the analysis of interviews and textual data. The

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movements, technological advancements and changing rules caused privatization in elderly housing?’, in order to get to know how certain occurrences have led to the institutional change in elderly housing. Table 4: Example how the theoretical concepts are operationalized into interview questions

Concept Dimension Indicators Question

Institutional change

Precipitating jolts

Social, technological and regulatory happenings that cause for

destabilization

What social movements, technological advancements and changing policy caused for-profit elderly housing to flourish? When did this happen? (Full operationalization to be found in Appendix III)

3.7 Data Analysis

In order to answer the main and sub research questions, the data needs to be carefully analysed. Cooper and Schindler (2011) mentioned that data analysis in a qualitative research is ongoing.

Therefore, to set the limits, case studies and data from the NL will be analysed according to the model of Greenwood et al. (2002). In order to support and organize the collected data, the author will use matrixes, tables and graphical presentations (Cooper and Schindler, 2011). The interview data will be structured by using a matrix. Multiple questions will be asked per theoretical concept. To keep a clear overview on the answers to these questions, these will be integrated in the matrix. With the use of these matrices, the data gathered will be more easily comprehended and this makes the analysis thereof easier.

3.8 Limitations

Qualitative research in the form of a case study has been criticized of being an inaccurate or improper strategy of inquiry (Tight, 2010). These arguments are based on two main sets of issues. The first one is about high internal validity as case studies bring forth subjective data. The second issue is on external validity, with the problem of generalization as case studies can only be used for exploratory purposes.

Yin (1981) called it the ‘case study crisis’ in response to these critiques. He describes different arguments that are in favor of a case study. For example that case studies give an intensive and detailed examination of one or multiple instances and for this particular type of research elderly housing organizations. This exploration on rich information allows extending existing theory and helps to develop hypotheses for quantitative research.

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researched. Another pro argument from Erickson (1986) is that the outcome from case studies can be viewed in different perspectives. This means that what happens in the case studies of this research can possibly be transferred to similar situations in other case study research. This leads to the fact that it is not up to the researcher to judge the appropriateness of a case study, but the reader whom can decide what matches their interest.

The research is limited to the NL. A multiple country study of all Western countries would give a better view of which institutional shifts are happening in the Western population, but the limited size of this thesis does not allow for such an extensive scope.

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4 Ageing and elderly care in the NL

4.1 Introduction

Before analysing the case studies some background information is needed. The following chapter will explain more on an ageing society. The highlight of this chapter is about precipitating jolts, wherein social, political and technological changes in the NL may cause institutions like the traditional ENH to destabilize. As these precipitating jolts are industry wide and not case specific, they will be discussed in this chapter.

4.2 Ageing

Due to an ageing society the demand for elderly housing will increase in the future. To get a better idea on the magnitude of this ageing population and what effect this has on elderly living, a demographic study was performed on the population of the NL.

4.2.1 Ageing in the NL

Ageing in the NL is caused by different factors. Two of the main reasons are that welfare has increased and has brought major improvements in general healthcare and therefore increased life expectancy. Furthermore, there is the baby boom (1946 – 1964) which leads to the fact that these people are now becoming elderly and this group is exponentially increasing (Garssen, 2012). Also, the percentage of the population that is 65 years and older increases as a result of this baby boom and the fact that their children choose to get lesser offspring themselves.

In the country ranking of population aged 60 years or over, the NL scored a percentage of 23,1% which ranked the NL number 21 out of the 50 most aged countries (Worldwide Ageing Society List, 2013). Other than that the group of people from 65 years and older is increasing, their average age is also climbing. Where in 1960 1 in 74 people was 80 years or older, in 2012 this already increased to 1 in 25. Especially this group of people will need the most care and therefore are often in most need for elderly housing.

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4.3 Elderly care / housing

The following section will portray how elderly care / housing is performed in the NL. 4.3.1 The elderly care/housing system in the NL

Dutch healthcare costs in the NL are around 25% of its GDP (CBS, 2012). This is a high percentage that not just the NL is facing nowadays, but countries worldwide as well, due to expensive new technologies, medicines, medication and an increase in welfare sicknesses (CBS, 2012).

All Dutch inhabitants are obliged to take a health insurance. Therefore, there is a very low amount of people that are not insured and at the same time this generates a steady cash flow (Garssen, 2012). Considering elderly care/housing, different insurances apply. In short these insurances are the AWBZ, WMO and PGB. Starting with the AWBZ (Algemene Wet Bijzonder Zorg / General Law for social assistance) is for those people that are indicated for the need to be institutionalized in an elderly or nursing home. This is an insurance for all people that need long-term care and assistance in day to day living. Every Dutch elderly has the same rights for the necessary care, which is fully financed. This care can be provided at home or in an elderly housing organisation. Dutch people that live in the NL are automatically insured and therefore sure to get this type of care. (www.rijksoverheid.nl)

By law it is stated that people with a limitation/restriction must be able to take part in society and live independently. This law is for elderly and persons with a handicap or chronic physical problems. These people have the possibility of asking for help from the local authority. The local authority provides ‘those with a need for care’ with a PGB. With this PGB the elderly or handicapped person is then able to purchase care from different organisations. Elderly can be provided with a PGB,

whenever the Indication Care Centre (CIZ) has given an indication for care. The elderly can use this sum to purchase the needed care, nursing and guidance. This way the elderly are not dependent on elderly homes or nursing homes. Both WMO and AWBZ provide the PGB. (www.rijksoverheid.nl) 4.3.2 Types of elderly housing in the NL

The type of elderly housing depends on the amount of care a person needs. Elderly housing can therefore be found in all kinds of shapes and sizes. Apart from the age of a person another

requirement, in order to apply for an elderly house, is that the elderly person is in need of a certain amount of care, measured with the care intensity package (Ministry VROM, 2009). The different forms of elderly housing is ranging from staying at home to an all-inclusive residential housing. See for a full overview Appendix VI.

4.4 Precipitating Jolts

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destabilized and privatization becomes stimulated. The following overview of precipitating jolts is focused on the elderly housing industry in the NL only.

4.4.1 Social

4.4.1.1 Elderly stay independent longer in the NL

Society is ageing and older people stay healthy longer than they did in the decades before. This has its consequences on the demand of elderly care/housing. Another trend is that elderly want to age in place, which means they want to live longer at home and whenever possible in a home that is adjustable to the care that the elderly needs. This movement is especially visible in the decline of people living in ENH. This decline in elderly people moving into ENH has been measured in all age groups from 55 years and older (CBS, 2010). Furthermore, elderly nowadays have more money to spend, in other terms a larger budget. A simple example to explain this is; A person that bought a house in 1960 and now wants to sell this house in 2014, will have a significant amount of money on hand. Whenever this person decides not to buy another house, but to rent an apartment with care services, this person can live independently longer.

Figure 4: Decline of men and women in ENH 2000-2010 (CBS, 2010)

The elderly that want to live at home are often the owner of a (luxurious) family home. The higher the quality of living a house has to offer, the less motivation there is for moving. The main reason that elderly move to a different home has to be found in the health condition of that elderly person. If an elderly person has medium to severe health problems, this increases the motivation to move with 45% (CBS, 2012). When these people have to move, a close by (within a couple of kilometres) new residence with the proper facilities can be found. With these findings on the health of elderly people and the quality of the homes their living in, the reason for moving is declining.

4.4.2 Political/regulatory 4.4.2.1 Extramuralisation

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means €3.273 per inhabitant in 2001 and €5.329 per inhabitant in 2011. Long term care provides the most costs and therefore the government is taking measures in the form of extramuralisation. Figure 5: Total expenditures (in billions of Euros) on care in the NL 2001-2011. (CBS, 2013)

For the elderly population this means limiting the elderly as much as possible from being taken to government funded ENH. The Dutch government has started these measures by adjusting the care intensity package an elderly needs for institutionalisation. The plans of these measures are taking place as from the year 2014.

The agency that decides on the care intensity package (CIP) a person should get is called CIZ (see for a detailed explanation the appendices). This CIP is measured with a scale of one to ten, one being a light need of care and ten for needing intensive care.

Indication Number of people in the NL

1 7.095 2 24.955 3 23.995 4 31.095 5 54.080 6 20.400 7 11.210 8 2.025 9 17.195 10 1.000 Total 193.050

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The above numbers were measured on the 1st of January 2012 and totalled 193.000 people with an indication from 1-10. In that same period, the number of intramural housing totalled 160.000. These numbers show that the demand for intramural care is higher than the availability.

The non-profit organization Humanitas mentioned that people indicated with ZZP 1 to 4 are unable to receive care in their institution any more since January 2014.

In the 1990s the government started by changing the regulation on the indication a person should meet in order to be placed in an ENH. Whereas before, people had the chance to be taken in with Humanitas without an indication. The government has calculated that the capacity for longer term intramural care is too high.

4.4.2.2 Participation society

The participation society is part of governmental/political ideas, which stands for less professional care, budget cuts from the government and more social cooperation. Reasons for this include; that first of all the government is not the sole welfare care provider anymore, as the above part on

extramuralisation explains. Secondly there is dissatisfaction about the current offer of governmental care providers. Thirdly, bad treatment and bad policies of large elderly care organizations. Lastly, the participation society preserves existing care utilities in the region, so that elderly do not become dependent from care far away. This is why the government has thought of the participation society, where society is stimulated to collectively help each other. The two positive effects are that elderly are not dependent on the care package from the government and at the same time this creates efficiency, which in effect leads to cost savings. The division of tasks in the participation society is that the government stimulates the idea for facilitating and providing aid. The welfare organisations will then see wherever they are able to help out. The larger corporations will facilitate and contribute wherever they can. The volunteering groups have to join hands, knowledge and experience to organise a participation society. (www.kcwz.nl)

4.4.3 Technological

4.4.3.1 The current offer of ENH are low in quality;

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4.5 Conclusion

The demographic study reveals that the NL is dealing with an ageing society. Even though the number of ENH is declining, an elderly person in the NL nowadays has multiple options for elderly

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5 Institutional change process

5.1 Introduction

In this chapter the results from the analysis will be analysed, based on institutional change in elderly housing. Four directors of the four Dutch elderly housing organizations Humanitas, NZZ, ZGD, BHS were interviewed.

5.2 Analysis of Case Study Companies

In order to research the process of institutional change, the model of Greenwood et al. (2002) was used. As previously discussed in the literature review, this model consists of six phases which are; precipitating jolts, deinstitutionalisation, pinstitutionalisation, theorization, diffusion and re-institutionalisation. The first phase of precipitating jolts has been reviewed in chapter 4. Before analysing the other phases it became apparent, during the interviews, that the organizations are not mimicking or copying business practices from each other. This means that the organizations have not come to the diffusion stage yet. As a matter of a fact, the elderly housing organizations are in the theorization phase right now. Therefore, the following chapter consists of an analysis of the case study companies based on the stages deinstitutionalization, pre-institutionalization and specifically

theorization.

5.2.1 Humanitas

5.2.1.1 Deinstitutionalization

Deinstitutionalization: In the beginning of the 1990s Humanitas had a total of 7 intramural long term care facilities. At this time 4 have disappeared because of cost savings. Now, from the 3 buildings remaining, new plans are made to separate the housing and care facilities.

Institutional entrepreneurship: Humanitas solely provides housing and care for the elderly and with decades of experience wants to be the best in their field. Services are outsourced to non-profit as well as for-profit privatized organizations.

5.2.1.2 Pre-institutionalization

New ideas: In order for elderly still being connected with Humanitas, but also being stimulated to live independently . Existing ideas don’t necessarily dissolve, but getting access to the existing practices of government funded elderly care becomes harder for the current elderly. A change in subsidizing policy, that certain services are paid by the elderly themselves and that the government will only be there for those who cannot afford it. Because of this trend Humanitas believes that other practices such as the more privatized housing become more interesting.

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Humanitas focusses on its non-profit core business housing and care, while services are outsourced to for-profit companies. This way Humanitas offers different services for; repair, restaurant, hairdresser, pedicure, meal delivery, washing, financial/accounting help, activities etcetera. As these services also are helpful for non elderly, Humanitas is looking to exploit more communal service in-house.

In essence Humanitas goes for its core business which is housing and care, and is outsourcing all other services. Basically the institution turns into a hotel for elderly with all the services it starts to offer; more comfort services with the same amount of care.

5.2.1.3 Theorization

Legitimacy: The name Humanitas can be broken down into the word humane. Instead of a business touch, there is the humane touch through the ‘yes-culture’ which is one of the values of Humanitas. Humanitas opens many doors through providing a whole range of services. The only problem the elderly meet with these services, is that a price is asked for providing this service. In the beginning the elderly had to get used to it and this did come with some protest. But after a couple of weeks the elderly saw the purpose of the service and the need of paying for it, after which it becomes an legitimized accepted service. When elderly live with Humanitas in an apartment that is separated of care, this elderly is responsible for the maintenance of this apartment, not Humanitas. Whenever something is broken, an outsourced privatized maintenance service can help.

In order to check the justification of the actions of Humanitas, monitoring is performed to check on the needs/wants of current tenants, as well as doing quality checks at the different locations twice a year. In this an outsourced agency operates with questionnaires as well as with a mystery guest.

The government is cutting the budget of municipalities, which has led to closing down social meeting centres. Humanitas innovates by designing meeting centres in their housing facilities, that come with additional services, which can be used by everyone.

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5.2.2 Zorggroep Drenthe (ZGD) 5.2.2.1 Deinstitutionalization

Deinstitutionalization:ZGD is a young organisation that originated in 2007 when six different ENH facilities were merged into what is today ZGD. This decision proved to be a good one for ZGD, as their solvability percentage is 50%, which makes that ZGD has a good negotiation position and can get a good interest percentage on loans. At the same time ZGD is able to lower the rental prices to become competitive. With this merger ZGD has set a strong position in the elderly housing market in the North of the NL.

Institutional entrepreneurship: ZGD does not focus on entrepreneurship, but more on carrying out existing practices and being the best therein with the lowest price. Certain services that are not in the core business of ZGD are outsourced to privatized organizations.

New ideas: Although ZGD can not undertake any commercial housing activities within the same organization, as this is considered illegal by law, whenever there is a room free in an intramural care facility, it can be rented as a care hotel for €50,- per day.

Change: Housing for the elderly will change towards the separation of housing and care. Different services are already privatized. Privately financed activities that are offered by ZGD are the meal service, grocery shopping service, the restaurant, personal alarm system, maintenance service and gardening.

Legitimacy: Whenever ZGD decides to implement a new idea, in this case for-profit or privatized services, there are always risks attached. One of those risks is not taking into account he legitimacy. The introduction of a new service will generally meet high critique from the elderly. After a few months the idea starts to get support and when implemented it is fully accepted.

Two years ago ZGD implemented a marketing department within the organization. ZGD wants to distinguish themselves from the rest with a marketing plan, in order to attract potential new clients. Even if ZGD would go into privatized elderly housing they stated that the yield margin should not be more than the average asking prices.

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ZGD is investing in projects for the separation of housing and care. 5.2.3 Nova Zembla Zorg (NZZ)

Deinstitutionalization: NZZ anticipates on deinstitutionalization, as the risks are analyzed when setting out new projects. By investing in different places, a specific target group of wealthy elderly people and with the main goal of cost reduction in mind. To achieve this NZZ has a strategic

marketing plan, where other elderly housing organizations do not have a marketing plan at all. At the same time Mr. den Hartog is using his network to lobby (Ministry of VWS) for more awareness about for-profit elderly housing and the positive effects thereof. This means that individual elderly housing organizations also have an influence on the theorization phase of institutional change.

Institutional entrepreneurship: NZZ was one of the first in the new form of housing for the elderly when they started.

New ideas: Due to the higher indication elderly nowadays need to meet, to qualify for a regular ENH, NZZ can take the people in that do not meet the requirements but have the money to spend.

NZZ offers high quality services, just like how it is done in a five star hotel. Apart from the luxurious building, the well-equipped rooms, the organization offers the inhabitants an extensive amount of services. At the same time NZZ is actively working on expanding their business to new locations. Change: The amount to be paid for a total package in a regular elderly home is €2.500,- per month whereas this is €5.500,- with NZZ. For this premium fee the elderly are able to live in a beautiful location/building and enjoy five star hotel/luxury services. The government is stimulating people that have more to spend, to really spend this money. According to Mr. den Hartog the high prices elderly pay for the for-profit elderly care NZZ provides is legitimized because people can and will want to pay for it. At the same time these people are kept away from the regular ENHs which results in more space for people that have less to spend.

Legitimacy: Choices are always made with the end customer, the elderly, in mind. But still this is a for-profit company, which means that making profit is also very important. So Mr. den Hartog clearly said that when certain choices are maid, which will lead to a loss, these choices will be changed. There is a healthy rivalry between the optimal choice on price strategy and optimal quality, where no

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A clear separation is going on between rich and poor. The good thing is that all the people are still able to get the same amount of elderly care. The difference will be in the level of service. In this

perspective Mr. den Hartog expects that an organization like NZZ will be rather common in 15 years. At that time there will be numerous different for-profit elderly housing organizations that offer elderly care/housing on different levels. At the same time questionnaires are filled in by the elderly for what they want and NZZ has regularly meetings with the family and care takers. This way NZZ keeps being involved with what is happening. At the same time social media keeps an eye on developments therein and by lobbying, Mr. den Hartog keeps an eye on what elderly countrywide want.

Professional associations: The IGZ is the professional association that has most influence on an elderly housing organization policy. The IGZ is a governmental and therefore bureaucratic entity that for NZZ is slow to deal with and this makes that they have a hard time with the change of elderly care/housing becoming for-profit. In the eyes of the inspection NZZ is seen as a regular elderly home that needs to meet the same requirements which all the other elderly homes need to meet. This is why again and again intermediate solutions have to be made for small for-profit elderly homes like NZZ. Another professional association to deal with is the health insurance. NZZ has to show that the money which NZZ gets from the elderly is actually spent on the AWBZ. NZZ must provide information about the personnel, whether they are properly schooled and so on.

5.2.4 Boarnsterhim State (BHS) 5.2.4.1 Deinstitutionalization

Deinstitutionalization: BHS is an example of separation of housing and care, as all elderly that live in BHS have their own apartment. Without an indication people can choose to live at BHS. Still BHS is not a nursing home and therefore, people can live in this residence up to a certain point in their lives. Institutional entrepreneurship: BHS is not an intramural facility. The residence offers a total of 16 apartments that are all different in shape and sizes. Plus all the extra services that come along with living here. But the care is all outsourced to a privatized home health care agency. BHS is an example of how the separation of housing and care can be privatized as well.

BHS wants to keep the amount of living units for elderly in the residence limited, as large residences obstruct personal care what BHS wants to provide to its elderly community.

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Change: In the beginning the price for the apartments had to be lowered. Apart from this the

surroundings, like the garden is being taken care of now, electric doors are installed and fire safety is improved.

Legitimacy: Now that BHS has the living and care separated, BHS is not found to be fully responsible any more for the in-house care. In order to keep track whether the elderly are still happy with living at BHS, regular feedback is asked from the elderly as well as from personnel. The elderly each have a personal care taker that ensures that the elderly can live at BHS, just the way he/she wants.. The price elderly pay is all-inclusive for services and products used in-house.

Professional associations: The IGZ, care office and all other professional associations do not deal with BHS, but solely with the care at home provider who is stationed in Heerenveen (a 30 minute drive from Boarnsterhim).

5.3 Comparison of Case Study Companies by Sector Type

The following section will discuss the findings per sector. For the non-profit sector these are Humanitas and ZGD. The second group, the for-profit organizations are NZZ and BHS. 5.3.1 Non-profit organizations: Humanitas and Zorggroep Drenthe

Deinstitutionalization is the worst enemy of the non-profit businesses Humanitas and ZGD. Humanitas has lost some buildings over time and ZGD started because of a merger, as the separate organizations most probably would have had a hard time to survive solely. Services are getting privatized to outsourced companies, so that Humanitas and ZGD can have a pure focus on what they are good at; elderly housing and care. The new trend herein is the separation of housing and care.

Pre-institutionalization

The main idea for non-profit elderly housing is that the new WLZ law from 2015 allow only those people with an indication of ZZP 5 or higher being institutionalized. This makes that existing non-profit elderly housing organizations are changing to the separation of housing and care in order for their business to survive. Any new ideas include that empty rooms can be sold for premium prices, like in a care hotel. Other changes include that elderly have to start paying or at least give a

contribution for using certain additional services apart from the care package. These services may well be outsourced to privatized companies.

The evolution of organizational forms; a comparative analysis of institutional developments, privatization and for-profit opportunities in elderly housing in the Netherlands