because empirical evidence suggests they behave differently under similar circumstances.<sup>10</sup> Interpreting any measured associations between the share of private contracting and the performance of publicly-financed health care services would require more precise information on how this contracting is implemented. To do this, a more elaborate index would be necessary, identifying a series of questions related to:

- specificity of contracts (in terms of service definitions and payment conditions),

- the existence of specialized public sector staff to supervise contracts,

- functioning information systems to independently assess contractual compliance, and

- application of sanctions in the event that contracts are not followed.

Additional measures that have been used in the literature related to ownership and which might be useful to consider include:

- share of publicly-financed hospital beds contracted out to NGOs (Bossert and Beauvais 2002),

- share of publicly-financed inpatient bed-days in NGO hospitals (Bossert and Beauvais 2002),

- expansion of hospital autonomy (Bangladesh)

# _Decentralization_

Decentralization has also been analyzed extensively in the literature on public administration and health sector policy in developing countries. Many studies argue that decentralization can improve health care service performance by allowing health care providers to make decisions that are appropriate to local variations in health conditions, service demands, and resource availability. Other studies argue that decentralization makes public health care services accountable to local stakeholders, citizens, and patients in ways that can improve health service performance.

While these effects have been demonstrated in some cases, other examples show the advantages of centralization. Centralized systems can produce more services by taking advantage of scale economies in purchasing, better utilizing scarce managerial skills, and optimizing resource allocation. Centralized systems can sometimes be more efficient and equitable by allowing certain locations to specialize in particular services, by pooling risks and by smoothing out resource consumption across different locations.

One of the better treatments of this subject can be found in Bossert and Beauvais (2002) who characterize the degree of decentralization by examining the amount of “decision space” accorded to local and central actors. The authors map decision space according to whether the “range of choice” for local decision-makers is viewed as narrow, moderate or wide, assessing the degree to which ministries of health and education prescribe how services are to be delivered. Bossert and Beauvais then survey indicators of finance,

> 10 The literature on this difference is most extensive in the United States. However, studies comparing the US and other wealthy countries (e.g. Mobley and Magnusson 1998) and a systematic review that includes developing countries (Hollingsworth 2003) demonstrate that the hypothesis of a difference between forprofit and non-profit organizations should be tested.

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