Implementation of hospital reform policies: lessons of experience

This London School of Hygiene and Tropical Medicine (LSHTM) paper reviews evidence from hospital reform studies in four countries: UK, Zambia, Indonesia and Columbia. It considers the argument the market forces model of reform increases efficiency through strengthening incentives. Critics of this model argue that it allows for perverse incentives and has unpredictable consequences for efficiency, equity and quality of care. By examining studies that tracked hospital performance after reform, the author draws out key lessons.

Evidence from three cases (UK, Zambia and Indonesia) demonstrates that hospital reform may be associated with productivity improvement. However, reform models can have unpredictable outcomes in highly variable contexts. Evidence also suggests that the specific form in which a reform model is designed is more important than the original motivation for reform. Lessons learned from this study include: the need to consider the role that competition will play in hospital markets, considering the political environment; recognition of contract incompleteness and the potential for perverse incentives, and in what form these will arise; and the costs and benefits of increasing the completeness of contracts, applying regulation external to contracting parties and allowing perverse incentives to prevail. [adapted from author]