Some experts argue that private healthcare providers are preferred by service-users, or are more efficient or accessible than the public sector, and hence that government should contract out services to them. However, factors such as institutional capacity to write and manage contracts and market competition affect how contracts with private providers function. This has major implications for contracting in low and middle-income countries (LMICs).

Research by the London School of Hygiene and Tropical Medicine explored the operation of a long-standing contract with private GPs in South Africa.

In South Africa, ‘part-time district surgeons’ (PDS) are private GPs who are contracted to provide primary care services by provincial health authorities. They are usually employed in rural locations, where they are dependent on both private practice and their contract with the province for their practice to survive. For the province, this contract helps address the shortage of doctors willing to work full time in the public sector.

The study looked at the contract and related correspondence and interviewed purchasers and providers. It found that:

• Due to the difficulty of specifying primary care services in any detail, the contract was felt to be incomplete and open to interpretation.
• Most PDS could not find their contract; some had never been given a copy.
• Monitoring was constrained both by a lack of capacity and resources. As a result, confidence in monitoring of services, particularly quality of care, was weak.
• Competition for award of contracts was extremely rare.
• Sanctions were vaguely specified and rarely used.
• Due to the PDS’ role as 'doctors of the state' under the apartheid regime, trust was not found to be an important explanation in the operation of this contract.
• Financial motivations, professional judgement, individual attitudes and ethical considerations were what PDS perceived as the real controls on their behaviour.

Key policy lessons are:

• The results of contracting out of services will be highly context-specific.
• Policy makers should recognise that formal controls such as rules set out in contracts and monitoring may be very limited in many LMIC settings. This is especially true for contracts in rural areas with individual providers.
• Where formal controls are less important, policy-makers need to understand what influences the behaviour of providers and whether they can affect these motivations. If scope for this is limited, motivations of providers should be assessed, before contracts are entered into, to see if they are likely to match public health goals.
• Encouragement of contracts with private providers by donors should be thoroughly scrutinised. Cases should be considered individually and within context.

Source(s):
'Classical versus relational approaches to understanding controls on a contract with independent GPs in South Africa', Health Economics, by N. Palmer and A. Mills, 2003
HINARI subscribers can access the full-text article here. Full document.
'The use of the private sector contracts for primary healthcare: theory, evidence and lessons for low-income and middle-income countries', Bulletin of the World Health Organisation 78 (6), by N. Palmer, 2000

id21 Research Highlight: 26 March 2003

Further Information:
Natasha Palmer
Health Policy Unit
London School of Hygiene and Tropical Medicine
Keppel Street
London
WC1E 7HT
UK

Contact the contributor: Natasha.Palmer@lshtm.ac.uk

London School of Hygiene and Tropical Medicine, UK

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