2 FRAMEWORK FOR HEALTH CARE REFORMS
2.3. DECENTRALIZATION OF HEALTH CARE
2.3.1. Frameworks for Decentralization
Figure 2.4: Frameworks for the Analysis of Decentralization
2.3.1.1. The Public Administration Approach
The public administration approach is widely used and was developed by Cheema and Rondinelli. They distinguish between four forms of decentralization on the basis of objectives: political, spatial, market, and administrative decentralization (Cheema/
Rondinelli 1983). Among the four forms it is administrative decentralization on which most of the literature is focussed. Administrative decentralization is used to “describe or reform hierarchical and functional distribution of powers and functions between central and non-central governmental units” (Cohen/ Peterson 1996: 10). “Deconcentration”, “devolution”,
“delegation” and “privatisation” are the four types of administrative decentralization which are used in most of the literature on decentralization(Omar 2002; Metzger 2001; Bossert 1998; Cheema/ Rondinelli 1983).
Following Cohen and Peterson’s definition of the four types from Cheema and Rondinelli,
“deconcentration” is the transfer of authority over specified decision-making, financial and management functions by administrative means to different levels under the jurisdictional authority of the central government. “Devolution” is the transfer of authority from the central government to local-level governmental units holding corporate status under state legislation. “Delegation” is the transfer of government decision-making and administrative authority and/or responsibility to institutions or organizations that are either under its indirect control or independent. (Cohen/ Peterson 1996: 10-11). While deconcentration is the least extensive form of decentralization, it is also the most common form of the three (Ibid., Metzger 2001: 72). Devolution in turn is the most extensive form of decentralization.
The Public Administration Approach
Source: own design; adapted from Bossert 1998
Frameworks for the Analysis of Decentralization
Local Fiscal Choice
The Social Capital Approach
The Principal Agent Approach
The Decision Space Approach
Although the forms and types of decentralization described above bring some clarity into the discussion of decentralization, they are not without critique. Eckardt quotes several authors criticizing the lack of aspects of allocation, pointing out that the definition is too wide, that the political dimension of democracy is not sufficiently incorporated, and that the concept can be misused by authoritarian regimes (Eckhardt 1998: 7). In her opinion it is the analysis of the goals of decentralization in relation to the used measures which is missing in the definitions and also in most of the studies. Furthermore, the literature also puts little emphasis on the analysis of effects of decentralization (Ibid.: 8). Although the definition identifies the process as such, it is indeed not clear what goals political decision-makers follow when they employ deconcentration, devolution and delegation.
2.3.1.2. Local Fiscal Choice
The local fiscal choice approach comes as the name already implies from the economic sciences to analyse local government choices of resource spending and intergovernmental transfers. It is not a market form of decentralization, since market forms deal with the production of goods and their distribution according to individual preferences (Cohen/ Peterson 1996: 10). Metzger introduces fiscal decentralization as a fifth form8. He uses the term to describe fiscal federalism and national cash flows which complement the fields of political and administrative decentralization (Metzger 2001: 78). Local fiscal choice can be seen as a fiscal form of decentralization. In this approach competition for mobile voters are the basis for local government decisions about resource mobilization and allocation (Bossert 1998: 1513). The presumption that local voters and therefore tax payers are mobile enough to choose the local government offering them the best conditions is overly optimistic. In most developing countries taxation is centralized and local resources are small, therefore, it is less realistic to assume a competitive scenario among local authorities for voters (Ibid.). Other political factors which also influence decision-making like clientalism, patronage, or local elites further limit the response of local authorities to the median voter. However, the approach focuses on local decision making, accountability of local authorities, and the use of local resources. Its strength lies in the concentration on the local scale.
2.3.1.3. The Social Capital Approach
The social capital approach was introduced in decentralization studies by Putnam (Putnam 1993). He links better institutional performance of decentralized governments to the density of civic institutions. For Putnam the density and tradition of civic institutions in an area create expectations, experiences and trust among the local population which form the social capital. Social capital, thus, generates more participation of the local population and, therefore, fosters accountability. Bossert adopts his approach to health care,
8 - see above: the other forms of decentralization are political, spatial, market, and administrative as developed by Cheema/Rondinelli 1983 and Rondinelli/ Nellis/ Cheema 1984 and described in Cohen/Peterson 1996
suggesting that “localities with long and deep histories of strongly established civic organizations will have better performing decentralized governments than localities which lack these networks of associations.” (Bossert 1998: 1516). But he also criticises Putnam’s approach for the lack of policy relevant conclusions. The social capital approach does not allow assumptions about areas with no civic institutions, despite the insight that decentralization will not work there. Since developing countries rarely have a history of strong civic institutions, this theory is not politically viable. However, Atkinson proposes to use Putnam’s findings for researching the influence of local social organizations and political culture (Atkinson 2000: 620).
2.3.1.4. The Principal Agent Approach
The principal agent approach comes from the economic sciences. In research it is often used to analyze intergovernmental transfers, the bargaining between local and central levels of government, and in the field of health care also for the research of provider-patient relationships (Bossert 1998: 1516). Silverman distinguishes between “top-down”
and “bottom-up” principal agency (Silverman 1992: 2). In the context of “top-down”
principal agency, local governments exercise responsibility on behalf of central governments or parastatals. In the “bottom-up” principal agency model, various levels of government or government parastatals act as agents of lower level of governments or directly as agents of beneficiaries/ users/ clients (Ibid.). Most of the literature only reflects the “top-down” principal agency, where the principal is “an administrative agency at the centre, which delegates, through legislation or contract, to a local-level governmental or private sector institution or organization (the agent) the authority to deliver health care to the citizen beneficiaries (client).” (Cohen/ Peterson 1997: 13). Thus, the principal uses the agent for the implementation of its objectives. Agents usually have other interests and more information than the principal. The principal has to generate incentives for the agent in order to ensure its cooperation and the delivery of information. Control of information and improved monitoring are central issues in this approach. In health care the Ministry of Health or the district health authority could be the principals who use local authorities or medical officers as agents. The approach sees these relationships as dynamic and assesses how performance is monitored and incentives and punishments are shaped (Bossert 1998: 1516-1517). The “bottom-up” principal agency incorporates the idea of community participation. Although actual examples of this approach are rare, some attempts to use this approach in primary health care have been encouraging (Silverman 1992: 2).
2.3.1.5. The Decision Space Approach
However, for Bosserts research all these approaches have shortcomings. Thus, he introduces the decision space approach as a modification of the principal agent approach.
He defines decision space “as the range of effective choice that is allowed by the central authorities (the principal) to be utilized by local authorities (the agents).” (Ibid.: 1518).
Decision space can be divided in formal and informal space. While laws and regulations define the formal side of decision space, their absence or lack of enforcement shape the informal side. Bossert examines the range of choice for different functions of local governments in finance, service organization, human resources, access rules and government rules (see Table 2.2). The range of choice and how this decision space is used by the agents affects the performance of health care reforms. The different functions help to understand decentralization not as a single transfer of power but rather as incorporating many processes. For each function an indicator is defined. The range of choice shows the degree of influence of central control through the principal on the agent.
The more control is exercised by the central level, the narrower is the decision space for the local agent. The decision space approach can therefore help to advise governments on how to decentralize functions to local governments and what extent of decentralization is useful to achieve the desired levels of performance. It is also an useful approach to assess the current status of decentralization.
Function Indicator Range of Choice
narrow moderate wide
Finance
Sources of revenue Intergovernmental transfers as % of total health spending
High % Mid % Low %
Allocation of expenditure
% of local spending that is explicitly earmarked by higher authorities
High % Mid % Low %
Fees Range of prices local authorities are allowed to choose
No choice or narrow range
Moderate range No limits
Contracts Number of models allowed None or one Several specified No limits Service
organization
Hospital autonomy Choice of range of autonomy for hospitals
Defined by law or higher authority
Several models for local choice
No limits Insurance plans Choice of how to design
insurance plans
Defined by law or higher authority
Several models for local choice
No limits Payment
mechanisms
Choice of how providers will be paid (incentives and non-salaried)
Defined by law or higher authority
Several models for local choice
No limits
Required programs Specificity of norms for local programs
Rigid norms Flexible norms Few or no norms Human resources
Salaries Choice of salary range Defined by law or higher authority
Moderate salary range defined
No limits
Contract Contracting non-permanent
staff
None or defined by higher authority
Several models for local choice
No limits
Civil service Hiring and firing permanent staff
National civil service
Local civil service No civil service
Access rules
Targeting Defining priority populations Law or defined by higher authority
Several models for local choice
No limits
Governance rules
Facility boards Size and composition of boards
Law or defined by higher authority
Several models for local choice
No limits District offices Size and composition of
local offices
Law or defined by higher authority
Several models for local choice
No limits Community
participation
Size, number, composition, and role of community participation
Law or defined by higher authority
Several models for local choice
No limits
Table 2.2: Map of Decision Space (Bossert 1998: 1519)