Institutional and economic perspectives on government capacity to assume a new role in the health sector: a review of experience


Health sector reform aims to alter the role of the state in health care financing and delivery. In a changing ideological and policy environment, the state is being encouraged to reduce direct provision of services, and to adopt an indirect role in service provision: to ensure health care is delivered, but often through other actors or agents. This new role requires the state to enter into new relationships with private, NGO and community actors. It must 'enable' or 'regulate' these actors, which might take the form of contracting out, the promotion of the private sector, or the creation of public 'arms-length' agencies. The main purpose of these reforms is to encourage competition, greater managerial autonomy and responsibility, consumer choice, and to promote private sector and NGO operators. Through these operators, and the incentives generated by the new arrangements, service efficiency, responsiveness and quality are expected to improve. The new models of service provision do not banish government but rather require it to take on roles that are different, often unfamiliar, and often more administratively complex and politically sensitive. But little attention has been given to considering how these new tasks should be performed, and whether governments have the capacity to adopt these new roles. This review paper provides the background to research that will take place in four country case-studies to examine these issues. A key focus of this paper concerns government's capacity to fulfil the new roles expected of it. The paper selects four important new reform arrangements: autonomous hospitals; user fees; contracting out; and regulation or enablement of the private sector, since these represent different dimensions of the public/private mix. The rationale for each reform, the extent of change and lessons learned are briefly reviewed. For all the reforms in the role of government considered, government capacity to manage the new service provision arrangements is questioned. The critical elements of capacity important to the organisations(s) involved in the service arrangement are often absent. For example, skills are often lacking (e.g. government officers' ability to negotiate contracting out arrangements, or define appropriate fee schedules). Organisations and systems for performing the new roles, particularly information systems for monitoring, are often undeveloped (e.g. accounting systems for revenue, information systems for regulating private providers). And resources to fund governments' regulatory and enabling roles (e.g. the financial resources of medical councils), and to develop important elements of capacity through training and infrastructure development, are often inadequate. The broader external, institutional conditions (economic, political, legal) which promote capacity to provide services effectively are often uncertain or vulnerable. For example, the size of the private sector in many contexts places limits on the potential for contracting; the independence of autonomous hospitals from political and bureaucratic interference is limited; and the necessary administrative frameworks to allow facilities to retain fee revenue are lacking in a number of countries. An understanding is required of what capacities are necessary to manage the new relationships. Where there exists considerable experience, as in the case of user fees, this is a relatively easy task. However, where there is less experience and consequently less understanding of the factors contributing towards success of a particular reform, the problem is more difficult. For example, with contracting, it is currently difficult to say which are important capacities for success: is it the existence of a large private sector, strong negotiating skills in the MOH, good economic analysis skills in the MOH, strong monitoring arrangements, or effective rule of law - or what combination of these capacities? The paper therefore raises many questions, which fieldwork in four countries (Ghana, Sri Lanka, India and Zimbabwe) will address.


Bennett, S.; Russell, S.; Mills, A. Institutional and economic perspectives on government capacity to assume a new role in the health sector: a review of experience. London School of Hygiene and Tropical Medicine, London, UK (1996) vi + 63 pp. [HEFP working paper 01/96] [Also published as a working paper in the Role of Government Series, DAG, University of Birmingham; and as PHP Departmental publication no 22, London School of Hygiene and Tropical Medicine]

Institutional and economic perspectives on government capacity to assume a new role in the health sector: a review of experience

Published 4 December 2006