Social-healthcare: network contracts take off

Strength in numbers in the welfare sector, especially when it comes to building critical mass at discussion forums or participating in public tenders. Healthcare and social care businesses rank first in terms of number of businesses that have signed a network agreement, the cooperation tool established by Law 33/2009 that allows multiple entrepreneurs to join forces to individually and collectively increase their innovative capacity and market competitiveness. This is the finding of the latest survey, updated to 2024, by the National Observatory on Business Networks, a collaboration between RetImpresa (Confindustria), InfoCamere, and Ca' Foscari University of Venice. The report not only surveys so-called "network" businesses but also explores the reasons that lead them to federate and the impact this union has on the governance of their associated businesses. In absolute terms, companies operating in social and healthcare services rank ninth out of seventeen economic sectors surveyed (with agri-food, construction, and trade at the top). They comprise 1,756 out of 46,746 manufacturing businesses, equal to 3.8% of the total. However, they also rank first in density, along with tourism services: 365 "network" companies for every 10,000 registered businesses, compared to 135 in the case of, for example, agri-food, the leading sector in both absolute (10,212) and percentage (21.8%) terms.

"The network contract is a formal agreement through which multiple entities pool both intellectual and material resources, such as personnel and offices. It's essentially like creating a new company that participates in tenders as a consortium. It's no coincidence that it's a legal form recognized by the Procurement Code. Above all, it creates a quasi-permanent and strategic network between multiple entities, unlike temporary business associations or special-purpose consortia (ATI and ATS), which are tied to individual activities, contracts, and specific tender procedures," explains Gianpietro Losapio, general director and vice president of the Nova National Consortium, which brings together 18 national groups of social enterprises in 15 regions. A dedicated study by the Observatory highlights how the network contract is increasingly widespread among associations, cooperatives, and foundations, especially in its hybrid form. The creation of alliances between nonprofit and for-profit enterprises is particularly noteworthy. These alliances, the researchers explain, are "an expression of a strategic vision of aggregation that takes shape in the commitment to creating new forms of partnership, extending to entities other than businesses, to spread the culture of collaboration and co-generation of value for individuals and communities as widely as possible." The point is that for-profit businesses seem more interested than the third sector. This fact doesn't surprise Giusi Biaggi, president of the Gino Mattareli-CGM Consortium, which comprises 451 cooperatives and 42 member consortia. The feeling is that in the private social sector, the idea of networking, even through other legal instruments such as the national consortium of social cooperatives, is losing its appeal. "For decades, the consortium-based network has been the driving force behind the development of social enterprises in Italy, both in terms of size and reach. We know that this consortium tool has been abandoned in many parts of Italy for various reasons: excessive internal competition, the growth of cooperatives and the resulting internalization of many services, and the questioning of the general contractor tool," explains CGM's head. This opinion is shared by Losapio, who notes that among third sector organizations, "there isn't much friendly competition ."

But how are networks structured in the healthcare and social care sector? The Observatory, based on a sample of 633 alliances, investigated the prevalence of networks: vertical, involving companies operating in complementary stages along the production chain; horizontal, consisting of companies operating in the same market segment and combining resources and expertise to achieve economies of scale, gain greater visibility, expand their product range, or access new markets; and finally, mixed, representing a combination of the two previous ones. In healthcare and social care services, vertical networks are particularly prevalent, accounting for 60% (the average percentage for all economic sectors is 45.47%), compared to 30% for horizontal networks (the overall average is 29.61%) and 10% for mixed networks (24.92%). "The supply chain issue that emerges from the prevalence of vertical networks is very interesting; This tells us that companies operating in social and healthcare services choose to join forces, leveraging the responsiveness of participating entities at different stages of the production process. And above all, the aggregation is formed around a specific theme, product, or service, and is not, instead, a broad-based alliance. It would be interesting to understand to what extent the network agreements thus established are also capable of conducting research, development, and, consequently, investments to generate new, transformative responses. Or, conversely, whether these networks are solely aimed at securing larger market shares," asks CGM's Biaggi.

What drives teamwork? The primary objective in welfare networks is to increase bargaining power, followed by participation in tenders and procurement. The Observatory, another key aspect of the research, examined the networks' main governance and coordination mechanisms. In social and health services, the president's influence, with an 80% share, is the highest of all the sectors analyzed (60.19%), while the assembly is present in 72.5% of cases (60.19%) and the joint body in 62.5% (63.51%). "I believe this choice is linked to the fact that the welfare sector, and especially the health sector, requires highly specialized leadership; consider the case of the physician who directs multiple clinics," observes Losapio of the Nova consortium. Other mechanisms used in this sector with higher-than-average percentages include both the administrative office (52.50% versus 38.70%) and the communications office (30% versus 23.70%). Finally, the network manager is present in 27.5% of cases, in line with the average for other sectors.

Photo credit: CGM Consortium/VITA Archive

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