Site Index
Main Page
Issues in Program Design

Contributor: World Bank
Author: Decentralization Thematic Team
Contact: Jennie Litvack

Decentralization & Health Care

The general argument for decentralizing health care is the potential for improved service quality and coverage; yet the issues of, one, exactly how these benefits can be realized, and two, the specific impact of different health system reforms are not well understood. Several features of health care (e.g., the controversial nature of some services such as family planning, the importance of formal training for personnel, and the integrated nature of services make decentralization in this area more complex and potentially more difficult than in other sectors. Since decentralization in the health sector is often politically driven, the theoretical benefits tend to get more attention than the more concrete facts of actual experiences in other countries, which is mixed. Without proper planning and acknowledgment of the lessons learned by other countries, decentralization of health care can be disappointing at best and detrimental at worst. This note raises the issues to consider if decentralization is to bring about beneficial results.

What is Decentralization?

The term 'decentralization' is used to describe a wide variety of power transfer arrangements and accountability systems. Policies range from the transfer of limited powers to lower management levels within current health management structures and financing mechanisms to extensive sectoral reform efforts which reconfigure the provision of even the most basic services. In the first case, decentralization may later become the driving force for health sector reform; in the latter, it is driven by the wider sectoral reform efforts. The parameters for decentralization -- the speed, the pressures, and the scope of issues to consider -- vary considerably.

The Promise of Decentralization

Health sector decentralization has become appealing to many because of it has several theoretical advantages. (Mills et al. 1990) These include the potential for:
  • a more rational and unified health service that caters to local preferences
  • improved implementation of health programs
  • decrease in duplication of services as the target populations are more specifically defined
  • reduction of inequalities between rural and urban areas
  • cost containment from moving to streamlined targeted programs
  • greater community financing and involvement of local communities
  • greater integration of activities of different public and private agencies
  • improved intersectoral coordination, particularly in local government and rural development activities.

The Caveats

We Don't Have Much Information

Little concrete evidence exists to date, however, to confirm that these potential benefits can be realized. Few developing countries have long-term experience with health sector decentralization, and its impact on the management of the sector and on the services it delivers has rarely been evaluated. Thus, the debate whether decentralization does indeed improve equity, efficiency, accountability and quality in the health sector continues without data to inform it. Although anecdotal and country-study evidence confirms that poorly designed and hastily implemented decentralization has serious consequences for health service delivery (Gilson et al. 1994, Kolehmainen-Aitken et al. 1997), we do not have a clear analytical framework to isolate or generalize the factors behind successful and unsuccessful decentralization. (Bossert 1997)

A First Attempt at a Framework

Past experience shows that achieving the benefits of decentralization depends heavily on policy design. In general, careful attention must be given to health service needs and priorities in deciding which functions and programs to transfer and which to retain under central control. If a function is critical to the attainment of central-level goals and its sustainability at the local level cannot be guaranteed, it should not be decentralized. With this in mind, the table summarizes a general framework for assigning responsibilities to central and local levels, while the rest of the note outlines a series of issue to consider.

1. Local government's freedom to adapt to local conditions must be balanced by a common vision about the goals of the health sector and the purpose of decentralization in furthering these goals. Decentralization policy should include some coordinating mechanism.

The prominence of local political interests increases as decentralization transfers more responsibility to this level. While responsiveness to local demands is a benefit of decentralization, it brings two main disadvantages. First, local officials frequently change and may, therefore, be uninformed about key national health policies. Second, local groups may also oppose national policies. One provincial governor in the Philippines banned a donor-funded project in support of family planning services. (It is certainly acceptable and indeed desirable if decentralization enables local governments to design programs according to local preferences; however, services of national priority (e.g., family planning) should be mandated and funded by the central government.

2. Adequate financing and clear delineation of new financial flow mechanisms is essential

In the preoccupation with defining an essential package of basic health services or a new decentralized health service model, the crucial issue of financing the decentralized health system may be overlooked. A significant financial gap between what is available and what is being planned can compromise the health sector's ability to provide equitable, efficient and good quality services under decentralization. Zambia and South Africa are both facing this issue in their current decentralization efforts. Several guidelines emerge from past experience:
  • Revenue allocation must take previously existing local expenditure responsibilities and own resources into account. In Bolivia and the Philippines, for example, the fixed funding formulas used to allocate national revenue between local governments failed to take into account the level of existing health facilities that these governments inherited and the services they were expected to provide. Local governments that inherited expensive new responsibilities, such as hospitals, often were not able to maintain the level of service previously provided.
  • Local freedom to allocate funding should be tempered with nationally-set minimum requirements. The degree of freedom that the local level has in deciding the amount of resources devoted for funding health services, together with local budgetary realities and financial procedures greatly influence the operation of the health system. In Papua New Guinea, several provincial governments failed to pay for nurse aide training which had been decentralized to them. Within four years, the training capacity for this important staff category fell from 13 government schools with 135 annual graduates to 3 schools with 13 graduates.
  • Any central policies must consider local conditions and capacities. In the Philippines, the discrepancy between the cost of health staff benefits promised under centrally-negotiated labor agreements and the local government capacity to pay have seriously eroded staff morale, while cumbersome local financial procedures have jeopardized timely availability of essential medical supplies. Some local governments require up to 40 separate signatures before a purchase order can be sent to a supplier!

3. Capacity constraints cannot be ignored in either central and decentralized management levels.

Ignoring capacity constraints at either central or local levels, or giving inadequate or delayed attention to training staff for their new roles are very serious omissions with predictable effects on health services. Decentralization places a considerable new management burden especially on the lower levels. Qualified health managers are in very short supply in many countries. Furthermore, management training capacity may be insufficient to meet the rapidly expanding training needs. Madagascar, for example, has begun to transfer planning, management and budgetary authority to 111 health districts without having a sufficient number of qualified health managers to serve all these districts. Decentralization changes the roles of the central ministry staff from line management to policy formulation, technical advice and program monitoring. The central-level managers also require systematic retraining and reorientation, which, however, many countries have overlooked. In other cases, staff cuts at the central ministry of health have been so severe that the center's capacity to function effectively is in question. It has been suggested that this is the case in Ethiopia at the moment. In Nepal, initial staff cuts at the central level paralyzed the Expanded Program on Immunization.


In summary, decentralization creates major challenges for health service provision. Active involvement of health managers in the decentralization design, clear national resource allocation standards and health service norms, and an ongoing system for monitoring are essential for guarding equity and quality and for improving efficiency.