The paper reviews various provider purchasing and contracting models and the advantages each offers for purchasing from the private sector. It then identifies the key challenges to successful implementation of these models, and discusses improvements needed in the contracting mechanism itself. It determines that the purchasing mechanism can create new incentives for providers, payers, and consumers on a national scale, but it may require that changes be made in the health sector as a whole for new programs to be successful.
The private (or non-state) sector holds tremendous opportunities to provide health care for those in need. De facto, in poorer countries, many of the poorest obtain their care from mission hospitals and individual independent providers. Often this is the only care available. Major challenges for governments and their development partners should be to raise the quality of that care and to reduce the financial barriers and adverse financial impact on poorer households using it. Provider purchasing by a knowledgeable organization on behalf of these consumers offers great potential for this.