Provider Purchasing and Contracting for Health Services_The Case

principles laid down in the National Health Polices and Strategies of 1992. These emphasized
the right of access to affordable health care of good quality to all Zambians. The
government’s overall vision was to “provide Zambians with equity of access to costeffective,
quality care as close to the family as possible.” In line with the global trends, the
government adopted the marketization of health care with the identified need for greater
efficiency and effectiveness of health sector performance. This was based on strategies
targeting private sector participation directly or indirectly through public-private partnerships
or through performance-oriented reforms of the public sector (Saltman 1995; Mills 1995).
The reforms were driven by declining health care service quality; economic decline and
scarcity of resources for health care and other sectors; the desire to restructure the sector and
make it more responsive to community, households, and consumer needs; and the desire to
achieve more efficient and effective resource use and outcomes.
The public health reforms spanned the entire public health sector from administration to
service delivery. Administrative reforms included the decentralization of the health system
through the creation of health boards at all levels of the health system. The newly created
autonomous District Health Boards managed primary health services, while Hospital
Management Boards and the Central Board of Health managed secondary and tertiary
hospital levels and the national level, respectively. The creation of these autonomous boards
resulted in a broad split between the Ministry of Health as a purchaser of services and the
autonomous boards as health service providers. This split formed the basis for the contracting
of health services in the public sector. Mills and Broomberg (1998) noted a number of factors
influencing contracting for health care, which include the following:
• the changing principles toward public sector management with the growing principles
of performance-oriented accountability and results achievement.
• Health outcomes such as life expectancy and infant mortality have been declining as
health systems in low-resource settings faced more severe resource constraints for a
number of reasons, including poor and deteriorating economic conditions, shrinking
public sector resources and allocations to health and other related public health sectors
(such as water, sanitation, and education), as well as emerging or reemerging
conditions such as HIV/AIDs and TB.
• The desire to maintain equity and effectiveness in resource use and consumption has
faced difficult challenges.
• Fourthly, the desire to generate accountability, improve quality, and increase
consumer satisfaction were also some of the conditions that led to the consideration,
design, and implementation of different ways of reimbursing and funding health care
services.
Following the decline in the quality of services and health outcomes as institutional
performance became increasingly diminished, the government initiated health reforms in
1992. The weak economic performance affected the private sector probably even more
because the investment and regulatory framework for private sector participation had not
included appropriate incentives for it to respond to consumer needs and demand. Yet, the
growth in private sector participation and its potential had become evident. One way of
alleviating the declining performance was to strengthen the public-private partnership.
The choice of contracting is underpinned by the notion that public service agents tend to act
inefficiently because they wield bureaucratic control over resources. This adversely affects
the efficiency of health care provision (Walsh 1995; Mills 1998). The creation of internal
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