Is contracting out an efficient means of delivering health support services? : a case study of a public hospital in Uganda

Bibliography: leaves 96-99.Health reforms that advocate for more private sector involvement in the provision and financing of health services are increasingly being considered as a means of ensuring more efficient provision of health related services. Though such reforms may be designed, funded and implemented it does not imply that the conditions necessary for them to yield the intended results do exist. One such reform is contracting out. The only national referral hospital Uganda has a long history of contracting out health support services, but there is hardly any empirical evidence of the resultant efficiency gains. To study the contractual arrangements in the hospital a theoretical framework based on what determines contract performance was used as the basis for the analysis. Several methodology approaches were used, which included in-depth structured interviews with the hospital administrator and key government officials on the entire contractual process and to establish the regulations and policies underlying the contracting out policy in the country. In addition a detailed documentary review was done for the contract design and implementation and other issues pertaining to the cleaning and security services. Cost data was obtained from the hospital’s expenditure and accounts records. Quality of the services data was collected using a quantitative interview schedule that required consumers to indicate their satisfaction with the security and cleaning services when they are provided in-house as opposed to when they are provided by contractors. One of the major findings is that while it was cheaper to provide cleaning services through contracting out, it was actually more costly to provide security services through contracting out than in-house provision. Therefore there is no clear pattern to support the hypothesis that health support services can be provided at a lower cost than direct provision of services. This is because contract costs are a function of service complexity, contestability and management capacity. Services that are hard to specify involve uncertainty about the nature and costs of production itself, which is likely to increase total contract costs both during contract negotiations and the post contract stage. Secondly, contractors had succeeded in providing better quality services than in-house provision. One pertinent issue of contract design is that is key to contract success is the detailed specifications of the expected outcome in terms of both quantity and quality for this greatly eases the enforcement and monitoring process and is likely to a positive impact on the quality of services that the contractors provide, for both parties will have a clear picture of what was expected. The study highlights a number of factors that contribute to the success of contracts: First, governments needs cost and quality information on its own services for this should be the basis upon which decisions to contract out should be made. Secondly, award and renewal of contracts requires regular and detailed evaluation of provider performance and of the market situation especially in low contestability and competition. Thirdly, there is need to have incentives within the management of contracts efficient monitoring. Lastly, contract failure was attributed more to the government bureaucratic and centralised systems that often resulted in delays in awarding contracts and paying contractors