Provider Purchasing and Contracting for Health Services_The Case

1. Introduction
Reforms in the health sector oriented toward the marketization of health care emerged during
the late 1980s and early 1990s in low- and medium-income countries as part of an identified
need for greater efficiency and effectiveness of health sector performance. There were two
key dimensions to the reforms: first, strategies targeting direct or indirect private sector
participation through public-private partnerships and, second, a performance-oriented focus
of the public sector (Saltaman R. B 1995; Mills A1995). In fragile states, contracting has
been introduced by donors to address the lack of appropriate health services in a country or
the breakdown of health infrastructure. The choice of contracting is underpinned by the
notion that public service agents tend to act inefficiently because they wield bureaucratic
control over resources, and this adversely affects efficiency in health care provision. The
creation of internal markets within the public and contracting out services in the public and
private sectors lead to a weakening of bureaucratic control, while introducing a performancebased
framework for service delivery that is also diversified by including public, private forprofit,
and private not-for-profit providers (Walsh 1995; Mills, 1998). Moreover, with
contracting, government gains authority in its regulatory and oversight roles and private
agents evolve from competitors to collaborators. This helps to harness private sector
resources and capture some of the advantages of competitive markets or ensure that services
are provided to the wider communities.
Despite the rapid growth of the private sector and obvious complementarities with the public
sector, most governments and the global health community have not adequately monitored
and engaged the private sector to exploit its competitiveness in meeting the health needs of
communities. Moreover, very few studies have been undertaken to understand the private
sector and the role that it could play in the health system. Meanwhile most patients, including
the poor, seek health care from the private sector as the first source of health care (Mills,
Brugha et al. 2002).
Generally, governments in developing countries have attempted to harness the private sector
by focusing on vertical contracting in addressing areas of public health programs and diseases
such as TB and HIV/AIDs. This is in spite of the abundant evidence that shows that the
private sector can effectively contribute to improved performance of the entire health sector
once embraced as part of the health system (Kistnasamy 2008). Unlike initiatives that address
vertical approaches to private sector participation, this study explored models for integrating
both public and private health resources to create a comprehensive health system better
equipped to achieve improvements in health outcomes based on the Zambian experience.
Socioeconomic profile
Zambian socioeconomic indicators have remained mixed during the period 2002 and 2006.
While there have been improvements in some indicators, some have worsened and others
have remained static at suboptimal levels (table 1), and this has been of great concern to
policymakers. As a result, like other developing countries, Zambia has committed itself to the
realization of the Millennium Development Goals on health by 2015. 1 According to the
1 See www.unmillenniumproject.org/goals/ for a full description of the Millennium Development Goals.
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