Purchase efficiency in Dutch youth care: locally least squares frontier method applied to municipality data

Abstract In this paper, we present an empirical model to analyse the efficiency of youth care by local government, especially with regard to purchasing policies. Locally least squares is applied to data from 352 Dutch municipalities operating in 2021. The outcomes reveal significant variations in the cost efficiency related to purchasing policies among municipalities. For all municipalities, the average cost efficiency is 84%. However, the corresponding standard errors of cost efficiency vary between 2.6% and 14.8% with a mean of 8.6% implying that only a limited number of municipalities are able to achieve efficiency gains with a high degree of certainty. Open House outsourcing and a framework contract without intermediate access are the most influential instruments on cost efficiency. Other features such as the duration of the contract and collaboration with other municipalities appear to have only a modest effect.