Academic journal article Bulletin of the World Health Organization

The Use of Private-Sector Contracts for Primary Health Care: Theory, Evidence and Lessons for Low-Income and Middle-Income Countries

Academic journal article Bulletin of the World Health Organization

The Use of Private-Sector Contracts for Primary Health Care: Theory, Evidence and Lessons for Low-Income and Middle-Income Countries

Article excerpt

Voir page 826 le resume en francais. En la pagina 827 figura un resumen en espanol.


Selective contracting out of services to the private sector is often a component of reform packages promoted by bilateral and multilateral agencies for low- and middle-income countries (1-6), where the private sector is increasingly acknowledged as an important and often well-resourced provider of health care services (7-10). The motivation for contracting with the private sector is both to utilize these resources in the service of the public sector and to improve the efficiency of publicly funded services (11-14). Although the use of contracting is increasing, little is known about the nature of many contractual relationships, especially in low- and middle-income countries. Furthermore, emerging evidence from health systems in developed countries is beginning to point to contractual relationships of a nature different from that originally envisaged, with competitive contracting showing a tendency to develop rapidly into durable, mutually dependent relationships (15-17).

The increased popularity of contracts as a reform prescription highlights the need to understand their nature and the manner in which they are likely to operate in the context of a developing country. This paper reviews some aspects of new institutional economics and evidence about the nature of contracts for primary care in the United Kingdom, one of the few countries where contractual relationships for health are well documented and researched. Both theory and practice highlight likely challenges in attempting to introduce a policy of competitive contracting in the context of low- and middle-income countries. The implications of this for a policy of contracting out in such countries are then discussed.

Primary care has been chosen as the focus of this review for several reasons. First, there is an inescapable trend in low- and middle-income countries to patronize private providers at primary care level: The world health report of 1999 concludes that "most people now prefer to use traditional or private sector providers of primary care", and further country-specific studies also support this view (5, 7--10). Contracts for primary care with private providers are often therefore seen as a quick and simple solution to gaps in coverage, especially in areas where government provision is inadequate and there are private providers already practising (13). Motivation to contract may also be inspired less by ideas of a comprehensive United-Kingdom-style internal market than as a practical approach to bringing the unregulated private sector under some type of control. A review of the experience of health systems in higher income countries to inform the likely direction of similar policies in low- and middle-income countries also seems valid at primary care level, given that the nature of the service and its providers are essentially comparable despite differing income levels across countries.

Contracts and the new public management

Since the late 1980s, contracts and contracting have become central themes of the transformation in public sector management taking place in many countries (18-20). In health, as in other sectors, prescriptions for change are rooted in a belief that the state is over-extended, inefficient and needs to be "rolled back", alongside a strong presumption that the practice of private sector management is more effective (12, 18, 21). In many government systems there has been a move away from hierarchical organizations towards the creation of a split between purchasers and providers, often governed by a contract (22). Although there is no single prescription for the type of market mechanisms to be used, common themes such as the desirability of competition and the use of contracts between purchasers and providers are discernible.

Although this so-called new public management is recognized as a striking trend worldwide, empirical evidence on its effects is often lacking. …

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