Contracting out of health services in developing countries

Contracting out is emerging as a common policy issue in a number of developing countries. The theoretical case for contracting out suggests many advantages in combining public finance with private provision. However, practical difficulties such as those of ensuring that competition takes place between potential contractors, that competition leads to efficiency and that contracts and the process of contracting are effectively managed, suggest that such advantages may not always be realized. Most countries are likely only to contemplate restricted contracting of small-scale non-clinical services in the short term. Prerequisites of more extensive models appear to be the development of information systems and human resources to that end. Some urban areas of larger countries may have the existing preconditions for more successful large-scale contracting.