August, 2008 - SUPPORT Summary of a systematic review | print this article |

Does contracting out services improve access to care in low- and middle-income countries?

Contracting out of health services is a formal contractual relationship between the Government and a non-state provider to provide a range of clinical or preventive services to a specified population. A contract document usually specifies the type, quantity and period of time during wich the services will be provided on behalf of the government. Contracting external management to run public services (contracting in) is a particular type of contracting.

Key messages

  • There is low quality evidence from three studies that contract-ing out services to non-state not-for-profit providers can in-crease access to and utilisation of health services.
  • Patient outcomes may be improved and household health ex-penditures reduced by contracting out. However, these effects may be attributed to causes unrelated to contracting.
  • None of the three studies presented evidence on whether con-tracting out was more effective than making a similar invest-ment in the public sector.


Contracting is a financing strategy in the sense that it is a way of spending public sector funds to deliver services.

Selective contracting out of services in low- and middle-income countries to the private sector is often a component of reform packages promoted by bilateral and multilateral agencies. Both the private for-profit and private not-for-profit sectors are often important and well resourced providers of healthcare services. The motivation for contracting with the private sector is both to utilize these resources in the service of the public sector and to improve the efficiency of publicly funded services.

About the systematic review underlying this summary

Review Objectives: To assess the effects of contracting out healthcare services in health services utilisation, equity of access, health expenditure and health outcomes.
/What the review authors searched forWhat the review authors found
Interventions Contracting out of healthcare services (a formal contractual relationship between government and non-state providers).

One CBA study from Bolivia
One ITS study from Pakistan
One cRCT from Cambodia

Participants Populations that would potentially access health services (users and non-users) as well as health facilities in low- and middle-income countries.
  • Bolivia: A neighbourhood in the capital city of la Paz.
  • Pakistan: The population of the rural district of Ra-himyar Khan
  • Cambodia: Six districts of the country (two con-tracted out and four run by the government. It also evaluated a non reported number of districts con-tracted in.
Settings Not limited to any level of healthcare delivery.
  • Two studies evaluated a contracting out motivated by weaknesses or absence of public system. Both took place in mostly rural areas.
  • One study with a programme based on an urban setting consisting of a network of eight health centres and one hospital.
Outcomes Objective measures of health services utili-sation, access to care ,healthcare expendi-ture, health outcomes or changes in equity
Health services utilisation and access to care (three studies), health expenditure (one study) and health outcomes (one study). No studies were found that measured changes in equity of access.
Date of most recent search: April 2006
Limitations: This is a good quality systematic review with only minor limitations.

Lagarde M, Palmer N. Evidence from systematic reviews to inform decision making regarding financing mechanisms that improve access to health services for poor people. A policy brief prepared for the International Dialogue on Evidence-Informed Action to Achieve Health Goals in Developing Countries (IDEAHealth). Geneva: Alliance for Health Policy and Systems Research, 2006.

Summary of findings

Three studies (one randomised trial, one interrupted time series analysis and one controlled before-after study) were found. All of them measured outcomes related to health services utilisation. Only one of them assessed patient outcomes and health expenditures. Overall, these studies suggest that contracting out services to non-state providers can increase access and utilisation of health services. Patient outcomes may have been improved and household health expenditures reduced by contracting out.

In the three studies, the effect could be attributed to causes unrelated with the intervention. In the randomised trial (in Cambodia) there were baseline differences between groups. Additionally, contracted districts received and used more financial resources (85% more than government districts). The districts compared in the controlled before-after study (in Bolivia) were not equivalent, and a concurrent extension of the insurance scheme probably contributed to increasing demand. The interrupted time series analysis (in Pakistan) did not report information about possible confounders.

Outcomes Impact Number of Participants
Quality of the evidence

Health services utilisation


  • In one study, there were differences in two of eight out-comes measured (an absolute increase of 21% and 19% in use of public facilities and uptake of vitamin A).
  • In another study, deliveries attended by health personnel increased in 20.8%. There was no effect in the duration of hospital stay or in bed occupancy.
  • The third study showed an increase of nearly 4,100 visits per day (0.33 visits per capita per year), but the effect faded with time.

(3 studies)

Healthcare expenditure


Household health expenditures diminished; although it was difficult to assess the size of effects (the authors suggested a reduction of between US$ 15 and $56 in annualized indi-vidual curative care spending).
(1 study)

Patient outcomes The probability of individuals reporting that they had been sick in the past month was reduced. There was also a de-crease in the incidence of diarrhoea in infants. (1 study)
p: p-value     GRADE: GRADE Working Group grades of evidence (see above and last page)

Relevance of the review for low-income countries

  • All of the studies were undertaken in LMICs
  • In the three included studies, the contracts were carried out with non-governmental organisations (NGOs).
  • The studies provided very little description of the actual measures implemented by the contractor (management, organisation, salaries, and incentives) to achieve the goals established in the contract.
  • Differences in health systems; in patient and physician attitudes towards NGOs; and legal restrictions may limit the applicability of the findings. The effects of contracting with private for-profit organisations are uncertain.
  • The three evaluations included in the review do not provide information about how to operationalise the contracting out of services.
  • Contracting can be a potentially effective strategy in particular settings but it may be difficult for governments to re-deploy public funds to private providers when available funds are already committed to public services.
  • Factors that need to be considered to asses whether the intervention effects are likely to be transferable include:
    • The availability of not-for-profit organizations to carry out the contracts;
    • The capacity within the public sector for set up and monitor the contracts.
  • The included studies do not provide data regarding any differential effects of contracting out for disadvantaged populations.
  • Depending on the population to which the contracted ser-vices are targeted, contracting could have a positive or nega-tive impact on equity. If NGOs are available to deliver ser-vices in underserved or rural areas not covered by public-funded services, contracting could be expected to reduce inequities. On the other hand, if NGOs do not serve disad-vantaged populations, contracting out could increase inequi-ties.
  • In the long term, the contracting out of health services could constitute a disincentive to the strengthening of public provision of services in underserved areas.
  • The findings of the studies provide little evidence of the long term desirability of contracting out.
  • While contracting out appears effective as a means to scale up service delivery rapidly in small areas, there are potential constraints that face these schemes in the longer term. It is unclear, for example, whether capacity exists among non-state providers to scale up their service delivery efforts. There are also concerns that a focus on contracting out may encourage donors to bypass failing or fragile states, thereby overlooking the important role building the institutional capacity of the local health system (including Ministries of Health) as either a steward or a service delivery organisation.
  • In the long run it is not clear if contracting out is a more effective or efficient way of improving access to health services compared with a programme aimed at strengthening healthcare delivery in specific underserved
  • Some of the improvements observed in the included studies may be attributable to other factors, such as the intervention of an international NGO in an area.
  • If a decision is made to contract out services, the impacts of contracting out compared to strengthening the public sector should be rigorously evaluated before scaling up. Both anticipated benefits and unintended adverse effects should be monitored.
  • A key aspect of the monitoring of contracting out is evaluating the capacity of the health system to adequately undertake this task
  • All Summaries: evidence-informed health policy, evidence-based, systematic re-view, health systems research, health care, low- and middle-income countries, de-veloping countries, primary health care.

*Judgements made by the authors of this summary, not necessarily those of the review authors, based on the findings of the review and consultation with researchers and policymakers in low- and middle-income countries. For additional details about how these judgements were made see:

Additional information

Related literature

Lagarde M, Palmer N. The impact of contracting out on access to health services in low and middle-income countries. Cochrane Database of Systematic Reviews. In press. (2008).

The impact of health financing strategies on access to health services in low and middle income countries. (Protocol) Cochrane Database of Systematic Reviews 2006, Issue 3. Art. No.: CD006092. DOI: 10.1002/14651858.CD006092.

Loevinsohn B, Harding A. Contracting for the Delivery of Community Health Services: A Review of Global Experience: World Bank, 2004.

Palmer N, Strong L, Wali A, Sondorp E. Contracting out health services in fragile states. BMJ 2006;332(7543):718 - 721.

Palmer N, Mills A. Contracts in the real world - case studies from Southern Africa. Soc Sci Med 2005;60(4):2505-2514.


This summary was prepared by

Gabriel Bastías and Gabriel Rada, Pontificia Universidad Catolica de Chile, Santiago, Chile


Conflict of interest

None declared. For details, see: 



This summary has been peer reviewed by: April Harding, USA; Benjamin Loevinsohn, USA; Tomás Pantoja, Chile; Maimunah Hamid, Malaysia.


This summary should be cited as

Bastías G, Rada G. Does contracting out services improve improve access to care in low- and middle- income countries? A SUPPORT Summary of a systematic re-view. August 2008.