Paradox

Research for Social Change

The Paradox of Growth: When Bigger Becomes Worse in Human Services Impact of Scale on the Quality of Services, and the Future of Intellectual and Developmental Disabilities Services

Human service organizations (HSOs) exist in a perpetual state of tension between evolution and entropy. Entropy is defined as the constant movement of a system towards a state of disorder and eventual collapse. While continuous adaptation and growth may seem like natural organizational imperatives, the reality for human service organizations, particularly those serving people with intellectual and developmental distinctions, is far more complex. With the troubling consolidation of provider agencies in the IDD service sector, organizations expanding across multiple states, and private equity firms driving ever-larger corporate structures, it should be acknowledged that size may be one of the key determinants of the failure of human service organizations.

The question under exploration is not whether organizational growth is inherently good or bad. The exploration into organizational growth in relation to human service organizations focuses on recognizing and avoiding the tipping point, beyond which the organization's size begins to compromise the human dignity and quality of life that these organizations exist to protect.

The Allure of Growth

The surface-level arguments for organizational growth or expansion appear convincing. For example, large organizations can sustain their size and justify further expansion and growth by spreading the cost of administrative functions across a greater number of service recipients. The Large organization also has, in theory, the capital resources to invest in better technology, attract specialized credentialed staff, and create expansive career advancement opportunities that smaller organizations struggle to match. Although the research indicates that, in practice, large organizations often fail to provide viable career pathways for many marginalized staff members, such as direct support professionals, by recruiting and hiring for key leadership positions from external sources. At first blush, larger organizations also appear to be better positioned strategically to weather the changes brought about by an increasingly complex regulatory and financial environment.

Growth and expansion strategies rooted in these types of financial and administrative justifications have been the catalyst for a wave of consolidation across the IDD service sector. Organizations that once served a single city or county now operate nationally. Private equity firms, attracted to the consistency of Medicaid reimbursement structures and funding patterns, have spent the last several years quietly consolidating smaller local and community service providers into larger corporate entities. Unfamiliar names, such as Centerbridge Partners, Bain Capital, KKR, and Wellspring Capital, are endemic of this trend and have taken over more familiar names, including Advoserve, Resources for Human Development, and Broadstep Behavioral Health. Moreover, well-known groups such as The Columbus Organization, a successful model being replicated across broader geographic areas, justify their growth by promising to bring proven practices to more people who need services.

From a business perspective, growth is a logical choice. Larger organizations can better handle the regulatory changes, economic downturns, and reimbursement delays that might crush smaller providers. Large organizations can also create specialized departments, such as incident management, compliance, quality assurance, and risk management infrastructure, which smaller organizations often struggle to afford—frequently relying on staff to perform multiple roles or tasks that might be better suited or more efficiently handled by a dedicated team or department. In theory, this should be translated into better, more reliable services for people with disabilities. But the evidence demonstrates the opposite. There are multiple lawsuits and closures of large organizations around the country stemming from the inverse relationship between growth and quality of care, particularly in the area of person-centeredness, abuse, neglect, and exploitation. As companies grow larger, the quality of care and the level of safety tend to decline.

The Hidden Costs of Organizational Obesity

The reality of growth for growth's sake in human services tells a different story, and the evidence demonstrates the opposite. There is a clear and definite tipping point. Organizations that grow beyond a particular threshold exhibit what systems theorists call "diseconomies of scale,” the tipping point where additional size leads to more problems than benefits. For organizations whose business is producing widgets and gadgets, diseconomies of scale represent a challenge primarily to the financial bottom line. However, in HSOs, the challenges that diseconomies of scale bring are not limited to, or exclusively, financial; they are fundamentally human in nature.

The first casualty of excessive growth is the person-centeredness that forms the foundation of delivering supports and services to human beings. When an organization serves thousands of people across multiple states, the intimate knowledge of individual preferences, needs, and circumstances that characterize high-quality IDD services becomes nearly impossible to maintain. Decision-making becomes increasingly more centralized among a small group of “leaders-experts” and further removed from the people most affected by those decisions. Organizational policies begin to lean increasingly towards rigid bureaucratic standardization, which prevents the individualized responses that people with intellectual and developmental distinctions and/or Autism require.

A small residential provider agency that supports 30 individuals might have an executive director and executive leadership team who know every resident by name, understand their personal histories, and can make rapid decisions based on individual circumstances. For a large service provider supporting 3,000 people across several states, these kinds of person-centered decision-making opportunities and quality of services would be impossible. The outcome of excessive growth is that people become mere case numbers, and individual dignity is sacrificed in the pursuit of administrative efficiency.

Unfortunately for most organizations and leadership structures, bureaucratization goes hand in hand with organizational growth and exacerbates this problem. Large HSOs are developing increasingly complex policies, procedures, and decision-making mechanisms to ensure consistency and manage risk across their expanded operations. Consistency becomes rigid standardization. Rigid bureaucratic standardization of processes may improve compliance and reduce liability, but they often do so at the expense of the flexibility and responsiveness that characterize person-centered services.

The Protection Paradox

The most troubling aspects of the consolidation trend, fueled by Private Equity Firms, are how organizational size appears to insulate providers from regulatory accountability. Large, multi-state organizations often possess the legal and financial resources to contest regulatory contract actions, negotiate settlements, and continue operating even when serious concerns about the quality of services and health and safety of the individuals being supported. The size and complexity can make it difficult for licensing and oversight bodies to impose the ultimate sanction—forced closure—because the disruption to so many service recipients would be enormous.

This creates a perverse incentive structure where organizations may become "too big to fail," regardless of their service quality. A small residential provider serving 20 people can be shut down relatively easily if serious problems emerge that compromise the health, safety, and dignity of the program participants. Alternative placements can be found, staff can be redistributed, and operations can be transferred to other providers. However, a large corporation that supports thousands of people across multiple facilities presents a significantly more complex regulatory and logistical challenge. The practical difficulties of finding alternative services for large numbers of people, combined with the organization's unlimited resources to fight closure, may allow substandard providers to continue operating long after smaller organizations have been shut down.

The size dynamic fundamentally distorts the accountability mechanisms that are supposed to protect people with disabilities. Instead of regulatory oversight driving continuous quality improvement, large organizations may be able to negotiate their way through serious violations. At the same time, smaller, potentially higher-quality providers face disproportionate scrutiny and consequences.

Recognizing the Tipping Point

So, how do we recognize when an organization has grown beyond its optimal size? The warning signs are often subtle but consistent across different contexts and service types.

The first indicator that an organization in the business of supporting human beings is growing beyond its capacity to meet those needs effectively is often the increasing distance between decision-makers and service recipients. When executives can no longer name significant numbers of the people their organization serves, when policy decisions are made without input from people with disabilities and their families, and when frontline staff report feeling disconnected from organizational leadership, the organization is approaching its tipping point.

The second red flag is increased internal bureaucracy. When program and direct support staff spend more time documenting compliance with internal policies than providing direct support, when simple decisions require multiple levels of approval and extensive paperwork, and when innovation becomes impossible due to organizational procedures, the organization has grown beyond its capacity to function correctly.

Quality metrics and core quality indicators serve as another lens through which organizational bloat can be seen. As customer satisfaction scores decline, staff turnover increases, regulatory violations become more frequent, and people served begin requesting transfers to other providers, it becomes increasingly clear that organizational growth has compromised service quality and delivery.

Perhaps most importantly, we should watch for signs that the organization has lost its connection to its fundamental mission. When financial performance becomes more important than quality of life outcomes, and when organizational energy focuses more on growth than on the people served, the organization may have crossed the line from healthy evolution to destructive expansion.

Sustainable Excellence is the better way.

This analysis should not be interpreted as an argument against all growth in human service organizations. Some expansion may be necessary to support innovative services, while organizational consolidation may indeed improve services by bringing better resources and expertise to underserved areas. The strategic question is whether growth serves the mission or serves the company.

Sustainable human service organizations might pursue what we could call "mission-constrained growth"—expansion that is explicitly limited by the organization's ability to maintain quality, personal relationships, and responsiveness to individual needs. This might mean choosing to serve fewer people better than more people adequately. It might mean declining acquisition opportunities that would compromise service quality. It may involve intentionally maintaining smaller organizational units even as the overall organization expands.

Some successful models already exist. Organizations that have grown by maintaining minor, autonomous regional divisions rather than creating large, centralized structures. Networks of smaller organizations that collaborate for purchasing power and share expertise while maintaining their individual identities and local focus. Cooperative models where growth occurs through partnership rather than acquisition, preserving the autonomy and character of individual providers while achieving some benefits of scale.

Policy Implications

The current trajectory toward ever-larger human service organizations is not a foregone conclusion. This trend is the result of paradigms and policy choices that can be changed. Reimbursement systems that reward volume over quality, regulatory frameworks that carry compliance costs more easily absorbed by large organizations, and contract actions that favor established corporate providers all contribute to the trend of consolidation.

The Cost

At the end of the day, the question of size relative to human service organizations is not an abstract business problem—it is a matter of human dignity and quality of life for some of our most vulnerable community members. While their rights and options have vastly improved over the years, people who experience intellectual and developmental distinctions remain at a disadvantage in their options for changing providers when they are dissatisfied with services, when compared to their neurotypically developed peers. Moreover, they may lack practical communication skills or social connections that enable them to advocate effectively for themselves. In many respects, people with IDD depend on a broader group of supportive others to help them recognize when organizational systems are failing and to take action to protect their interests.

When human service organizations grow beyond their capacity to maintain personal relationships, individual responsiveness, and mission focus, the people they serve pay the price. That price is undoubtedly measured in terms of a reduced quality of life, compromised safety, diminished dignity, or simply the loss of engagement and support; that is the difference between existing and truly achieving their vision of a good life.

Evolution Without Entropy

The challenge facing human service organizations is innovation. Finding ways to evolve and adapt without losing their essential humanity. This requires a more sophisticated understanding of organizational development that goes beyond simple metrics of size and revenue to include measures of relationship engagement, understanding the difference between feeling safe and being safe, and how organizational structures contribute to that feeling, as well as quality, individual responsiveness, and mission fidelity.

This delicate balance between organizational expansion and the maintenance of high-quality, innovative, person-centered services requires regulatory and oversight frameworks that have the capacity to distinguish between organizations that have grown while staying true to their mission and core values and those whose quality of service has been diminished as a result of their growth. Evolution without entropy also involves funding systems that reward service excellence marked by innovation and achieving quality of life outcomes rather than merely efficiency. And it requires transformational leaders committed to always finding the better way.