Elsevier

Social Science & Medicine

Volume 47, Issue 10, November 1998, Pages 1513-1527
Social Science & Medicine

Analyzing the decentralization of health systems in developing countries: decision space, innovation and performance

https://doi.org/10.1016/S0277-9536(98)00234-2Get rights and content

Abstract

Decentralization has long been advocated as a desirable process for improving health systems. Nevertheless, we still lack a sufficient analytical framework for systematically studying how decentralization can achieve this objective. We do not have adequate means of analyzing the three key elements of decentralization: (1) the amount of choice that is transferred from central institutions to institutions at the periphery of health systems, (2) what choices local officials make with their increased discretion and (3) what effect these choices have on the performance of the health system. This article proposes a framework of analysis that can be used to design and evaluate the decentralization of health systems. It starts from the assumption that decentralization is not an end in itself but rather should be designed and evaluated for its ability to achieve broader objectives of health reform: equity, efficiency, quality and financial soundness. Using a “principal agent” approach as the basic framework, but incorporating insights from public administration, local public choice and social capital approaches, the article presents a decision space approach which defines decentralization in terms of the set of functions and degrees of choice that formally are transferred to local officials. The approach also evaluates the incentives that central government can offer to local decision-makers to encourage them to achieve health objectives. It evaluates the local government characteristics that also influence decision-making and implementation at the local level. Then it determines whether local officials innovate by making choices that are different from those directed by central authorities. Finally, it evaluates whether the local choices have improved the performance of the local health system in achieving the broader health objectives. Examples from Colombia are used to illustrate the approach. The framework will be used to analyze the experience of decentralization in a series of empirical studies in Latin America. The results of these studies should suggest policy recommendations for adjusting decision space and incentives so that localities make decisions that achieve the objectives of health reform.

Introduction

Decentralization has been promoted by advocates of health sector reform in developing countries for decades. Viewed initially as an administrative reform which would improve efficiency and quality of services and later as a means of promoting democracy and accountability to the local population, decentralization was seen by many advocates as a major reform in and of itself. Despite this advocacy, until very recently only a few nations have actually adopted and implemented decentralization reforms. This lack of experience is reflected by the few empirical studies which examine the actual impact of decentralization1. There has been no systematic study using a common analytical framework to examine the relationship between processes and types of decentralization and actual outcomes or performance in the health sector.

Section snippets

Objectives of this article

The objective of this article is to develop a comparative framework to analyze the effectiveness of decentralization for reaching the goals of health systems in developing countries. This framework will be used by the author in a series of forthcoming empirical studies in selected developing countries that have sufficient experience with decentralization to evaluate performance.

A comparative analytical framework should provide a consistent means of defining and measuring decentralization in

Review of frameworks of analysis

The following section reviews the major frameworks for analysis used in the current literature on decentralization. Our immediate objective in this review of frameworks is to determine which approach is appropriate as an overall framework for evaluating how decentralization contributes to the achievement of general health sector goals.

Modifying the principal agent approach to address decentralization and health reform: the decision space approach

The following sections tailor the principal agent approach to the issues of decentralization and the achievement of health reform objectives. The principal agent approach places the issue of decentralization in the context of the objectives of the principal and how the principal uses various mechanisms of control to assure that the agents work toward achieving those objectives. The literature on the principal agent approach identifies several channels of control which are available to the

Characteristics of the agent

The characteristics of the agent will also influence how it responds to the mechanisms of control and how it pursues innovations. These characteristics can be classified as being related to (1) the motivations and goals of the agents, (2) the role and influence of local principals and (3) the capacity of the local agents to innovate and implement.

Policy implications of the decision space approach

The decision space approach has some direct implications for policy choice at the central level as well as at the local government level.

National governments generally control the rules and processes of decentralization. We want to be able to advise them on how to shape the decision space for local governments so that these governments will make choices that are more likely to achieve the desired levels of performance. The decision space approach will give us some idea of how much discretion,

Acknowledgements

This article is based on research supported by the Data for Decision Making Project (funded by United States Agency for International Development, Cooperative Agreement DPE-5991-A-00-1052-00) and the Colombia Health Sector Reform Project (funded by the Government of Colombia and the Interamerican Development Bank, Contract No. 001/95) both based at Harvard University School of Public Health. The author wishes to thank the following colleagues for significant comment and suggestions on drafts

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