Provider Purchasing and Contracting for Health Services_The Case

services. Often, private facilities refer their clients to other facilities for diagnostic services
and reimburse the other facility for the service at a negotiated rate. In addition, hospitals also
purchase beds from other private facilities when they are oversubscribed. The cost of the
arrangement is borne by the hospital that makes the referral. Furthermore, there is contracting
between a private laboratory and some private hospitals. Under the contracts, the private
hospitals seek to be provided with a number of laboratory services. In a few cases, the rates
are negotiated; otherwise market rates apply.
Contracting in the non-formal health system
In the non-formal health system, traditional healers practice more or less at random under the
guidance of the Traditional Healers Association of Zambia which is works closely with the
Ministry of Health but not on a formal level. There is no contracting-out of services in this
sector. Traditional healers are usually handled with suspicion because most of their work is
difficult to evaluate (see Wake 2008).
Vertical programs
Apart from the contracting discussed so far, other forms take the vertical programming
approach. These contracts are undertaken when specialized services are needed either by the
private sector or the public. These could be clinical or nonclinical. A number of contracting
arrangements based on specific aspects of health services were found in several areas. Some
of these are discussed below.
Public sector contracting with nongovernmental organizations
Interviews with Ministry of Health staff and managers of various nongovernmental
organizations in the health sector revealed that the government contracts with them for
various services based on their competences, ranging from clinical to nonclinical services.
These tend to be short-term contracts, usually for a year or less. The contracts are based on
the contractor needs assessment. Often the contracts specify the activities to be undertaken as
well as the target audience. They also provide the terms of reference that stipulate the mode
of operation, the amounts to be paid, and the overall expected performance. At the
contracting stage, the government and the contractees negotiate the contracts which also
specify the indicators of performance. Examples of the areas in which the government has
usually contracted with nongovernmental organizations are reproductive health, family
planning, adolescent sexual reproductive health, safe motherhood, public health programs
(such as immunization, rabies control, and malaria prevention), and HIV/AIDs-related
services. For example, the government contracts with the Planned Parenthood Association of
Zambia (PPAZ) to provide specialized reproductive health services. In addition, PPAZ is also
usually contracted to provide training of public personnel in aspects of reproductive health.
Restrictions on the services are also spelled out, usually in line with the national laws existing
at the time. For example, PPAZ does not perform abortions, which are illegal in Zambia.
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