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Organization and Service Delivery

Who delivers health care and in what settings? How are those facilities organized? Where do people go for care and why? How do policies affecting organization and service delivery affect the overall performance of health systems?

The scope of the Organization and Service Delivery control knob includes the overall structure of organizations that deliver health services (including government and non-government sectors), the institutions and processes that provide inputs (such as staff and drugs) to these organizations, and the factors affecting the individual institutions that provide the services. Governments develop and implement policies which influence organization and these policies can be used to affect the outcomes that health systems produce as well as their distribution.

The concept of the organization of health care services includes both the entire structure of health care delivery as well as individual health care facilities such as hospitals, traditional healers working out of their homes, midwives, and shop keepers selling over the counter medications. It is useful to think about the “macro” organization of health service delivery as well as the “micro” organization, as the following figure illustrates:


Bullet  Characteristics in the organization of service delivery 

Bullet   Strategies to influence organization 




Bullet   Six Keys to Organizational Performance 

Bullet   Assembling A Reform Package 

Bullet   Additional Reading


Source: Berman, P. “Organization of Ambulatory Health Care Services: A Critical Determinant of Health System Performance” Bulletin of the World Health Organization, 78(6):791-802, 2000.

There are four key characteristics in the organization of service delivery:

  1. The mix of organizations that provide health-care services; 
  2. The division of activities among these organizations;
  3. The interactions among these organizations and their relationship with the rest of the political and economic environment—especially how they get the resources they need to continue to exist; and
  4. The internal administrative and management structures and processes of these organizations.

Most countries structure the delivery of government provided health services as a hierarchy –from small peripheral units (‘sub-centers’ or health posts) to larger clinics, small hospitals, and larger hospitals. The lowest level facilities are most accessible and lower in cost but also have the most limited scope of services and are least demanding in terms of quality. In contrast, large hospitals are the least accessible and most costly, but offer a wide scope of services and are the most demanding in terms of quality. A referral chain should link the two extremes, in theory providing an optimal mix of service provision. In practice, partly because organizations and people don’t behave the way planners expect them to, this rarely works out.

Governments interested in reform can affect (both government run and private) organizations and the people that work in them through policies which:

  • Determine which types of organization can exist and grow (e.g. finance, regulation, government programs);
  • Determine how resources are supplied to these organizations (e.g payment); and
  • Policies which try to change the behavior of providers and patients to improve organization performance.

For example, the Government can invest directly in new or additional health care delivery facilities such as rural health clinics or community health workers or introduce new incentives, such as contracts, to promote the development of new facilities in the non-government sector. Implementing policies along these lines can change the mix of organizations that provide health care and the services they offer, and the internal structure of providers – including workers and managers and the relationships between them. We usually observe how organization affects intermediate outcomes in terms of access, quality, and efficiency.

  • Access: influences utilization, satisfaction, health, etc.
  • Quality: influences use, health, satisfaction etc.
  • Efficiency (especially technical efficiency): has an impact on cost, outputs and outcomes—but it is not an outcome itself.

These changes in turn affect health systems performance in terms of outcomes in health, financial risk protection, and consumer satisfaction, through effects on the access to services, quality and efficiency and lower costs. Organization is also very important for the distribution and equity of health systems performance. For example, different groups in a community may prefer some types of providers to others. Women may prefer female midwives to male physicians. Poorer patients may feel more comfortable with providers from a similar social class or ethnic background.

The Six Keys to Organizational Performance – Reformers can use the following six keys to organizational performance to conceptualize different strategies of change.  These six factors include incentives to organizations and how they reach managers and workers. They also include the skills and attitudes of workers and managers that enable them to respond to those incentives.  This approach allows reformers to address a combination of the reasons to do better (external incentives) with the capacity to do better (internal management). Effective reforms must ultimately influence the behavior of front line workers to bring about improvements in access, quality, and efficiency.

1) Incentives on the Organization
What does the organization have to do to acquire the resources it needs to survive and grow?
Who provides these resources and in what form do they affect the organization’s behavior?
What other constraints or opportunities does the organization face from competitors, customers, regulators, budget makers, grant givers, etc.?

2) Incentives for Managers
Managers have to respond to incentives on the organization as a whole, yet they also have their own personal incentives.
How are managers rewarded or punished?
How is this tied, if at all, to the performance of the organization?
What channels of reporting, supervision, and accountability exist?
What is their potential career path outside their current organization?

3) Skills, Attitudes, Beliefs and Values of Managers
What do managers bring to their work in terms of values, skills, and attitudes?
How are these shaped by education, selection, training, and work experience?
How do managers see their job? What is their view of their responsibilities?

4) Authority of Managers
What decisions can managers make, both internally and externally, about products, prices, production processes, purchasing, personnel, etc.?
Can they hire and fire, make investment decisions, choose strategies, etc.?

5) Incentives for Workers
How, if at all, do the rewards workers enjoy vary with their performance and/or that of the organization as a whole?
What determines pay, employment, promotion, etc.?
Do they have any significant nonmonetary incentives?

6) Skills, Attitudes, Beliefs and Values of Workers
What do workers bring to their work in terms of values, skills, and attitudes?
How are these shaped by education, selection, training, and work experience?
How committed are workers to the “product” of the organization as a desirable activity?

When using the Six Keys policy makers should keep in mind the following:
• Ask of any proposed reform—how, if at all, will it affect the “six keys”?
• If you cannot trace the effects of a reform down to the front line workers, they will not change their behavior and the reform will not improve care and performance
• Be honest about unpleasant realities. Will reform be derailed by corruption or lack of motivation or accountability?

Taking into consideration the Six Keys, here are some specific examples of strategies for using the organization control knob. As with other health system reform strategies, how reforms are designed and implemented often make the difference between success and failure.


Strategies to influence organization towards providing better outcomes: Who-does-what, Improving Public Sector Management and Functioning, and Decentralization

Who-does-what strategies – These strategies focus on changing the mix of organizations and the division of tasks among them. Two major strategies include 1) Government decisions to change the organization of their own service delivery through reorganization or development of new types of organizations, 2) Government decisions to engage with the non-government sector to deliver services either through contracting out or subsidies, and other measures to encourage private supply.

Engaging the Private/non-state sector –increasing the role of non-state providers in service delivery is one way of adjusting ‘who-does-what’. Government and non-government providers may differ significantly in terms of access, cost, quality, and customer responsiveness. Achieving government objectives of increased health outcomes or improved financial protection does not necessarily require that governments “make” all the services desired through state institutions – sometimes governments should “buy” what is needed from other producers
(Citation: A. S. Preker, A. Harding, and P. Travis, "Make or buy" decisions in the production of health care goods and services: new insights from institutional economics and organizational theory. Bulletin of the World Health Organization. 2000; 78(6): 779–790. )

Governments can implement policies to work with the non-government sector to change who does what, including:

  • Purchasing and contracting: government agencies buy services from non-government providers
  • Subsidies: government agencies wholly or partially support private agencies to develop or expand alternative providers, e.g. social franchising
  • Regulation: government modifies laws/rules to encourage private provision as part of policy to change organization
  • Privatizing government providers to make them non-government providers – either non-profit or for-profit

Scale and Health Service Performance – The scale of provider organizations can affect their performance. Larger organizations can lower costs by being able to fully utilize expensive equipment and spread administrative costs over a larger patient base. The scale of facilities can also affect quality as physicians with more opportunities to practice certain procedures or see particular cases can improve their skills. In contrast, overly centralized facilities, such as large central referral facilities, may increase access barriers for those in more rural areas or marginalized groups. The tradeoffs among clinical quality, service quality, and effective access are important design issues in determining the mix of large and small facilities and the outcomes they can achieve.

Scope and Health Service Performance – The types and range of services offered by different facilities is another dimension in organization design. There are gains to be realized both from facilities specializing in one disease or condition and from diversification. A broad scope allows equipment to be used for many different procedures and reduces the necessary population base for a provider. However, patients can also benefit from a group of highly skilled specialists who in turn benefit from being able to work together and learn from each other. There are potential synergies in health outcomes from integrating different services. Recent international debates contrasting more specialized “vertical” programs, which may focus on a single disease or intervention and more “integrated” service delivery strategies, illustrate some of these issues. (See also 2008 WHO Report:  p. 48 and also Maximizing Positive Synergies Collaborative Group paper: )

Providing Services in Rural Areas – The disparities in health needs and access to care for poor rural populations may require special strategies to reform organization in health care for rural areas. Higher level health personnel, such as physicians and specialists, may not be available in sufficient numbers or may not accept or fulfill rural postings. In addition, rural facilities tend to be less well equipped and may lack essential drugs and supplies, which discourages utilization. A variety of organization strategies are used to address these kinds of problems, such as the use of community based workers and ‘task shifting’. Governments may provide monetary incentives or preferred treatment for later postings or further educational opportunities. Governments may also change the types of providers used in rural settings, for example instead of employing doctors relying on nurses (and task-shifting) or community health workers.

Inputs – Changes in ‘who-does-what’ may also require reforms linked to policies related to the production of health worker “inputs”, such as training and education of health workers.  This could include, for example increasing spaces in medical school for certain kind of physicians or nurses, altering or creating new training programs for new types of workers, or increasing access to certain capital equipment such as vehicles. As with service provision itself, governments may also choose to “buy” these kinds of inputs (for example from non-state educational institutions) rather than “make” them. 

Improving Public Sector Management and Functioning

Incentive strategies – These strategies take advantage of the fact that organizations have to acquire financial resources in order to operate successfully. Reformers can change what must be done to obtain resources, through encouraging competition or using contracting, in order to change the behavior of providers. Competition can lower costs and increase responsiveness to customers.  Governments may encourage competition by decreasing regulatory barriers, supporting new producers and enforcing antimonopoly laws. Results-based financing and contracting are also being increasing used to incentivize service provision. If well implemented, contracting can improve technical efficiency and clinical and service quality. Similarly, providing worker incentives, and making adjustments can attract and retain more motivated employees. 

Managerial strategies – These strategies focus on changing what happens inside an organization. In some cases, for instance if the government owns and operates facilities, changes can simply be introduced by internal government decision making. When this is not the case, other methods have to be used. Managerial strategies typically focus on how things are produced to improve technical efficiency and service and clinical quality - rather than changing what types of services are produced. A range of approaches can be employed to bring about management-related changes such as decentralizing the public sector, allowing facilities to have greater autonomy or allowing for private-sector management in the public-sector. Public sector performance in terms of management can also be improved through trying to improve managerial skills and attitudes and adjusting managerial authority.

In looking through and thinking about these incentives and managerial strategies it is important to remember that having the incentives to improve performance or the authority to improve efficiency (through managerial strategies) is not sufficient to bring about change. Providers also need the capacity to respond to those incentives. In addition, these strategies need to work together; for example, changes like decentralization or contracting will not alter outcomes unless managers have the authority to make decisions at the facility level.

Providing incentives to facilities, managers and physicians for improved performance often assumes that these actors have the authority to make changes at their facilities and respond to these incentives. In countries with highly centralized systems this may not be the case. One strategy for adjusting organization and improving service delivery is to decentralize management and budget authority for lower level health facilities. This allows managers and health care workers familiar with the local situation to respond to those needs.For example, when planning according to local disease burden and population needs, different equipment and supplies can be bought to fit local situations – perhaps some facilities need to stock more malaria drugs while others need to improve their patient waiting areas.

Assembling a Reform Package for Organization and Service Delivery: some conditional guidance

  • Changes involving more than one complementary “control knob” and more than one of the “six keys” are often required to implement effective organization policies: For example if civil service rules cannot be modified, changing the compensation of front-line providers may require other organizational changes such as autonomy or privatization; or paying hospitals for performance will work better if managers have greater authority (e.g. from autonomization) to make internal changes;
  • Analyze BOTH incentives and capacity. Don’t assume that simply introducing incentives on the organization will necessarily generate changes on the other five of the six keys
  • Both demand and supply matter for performance. Improving technical quality may not improve outcomes if access remains low due to perceived quality or lack of understanding
  • Higher level management capacity is essential. Will higher level managers support change? (What are their incentives? Do they have the skills to handle new strategies, such as the ability to contract or to monitor organizations’ outputs and quality?
  • Political support is key. For example, who supports organizational reform and why do they support it?

Essential Requirements for Successful Organizational Reform

  • Macro and micro level changes may both be needed or at least must be aligned.
  • To improve their performance, organizations need reasons to do so (e.g. incentives, other motivators) and the internal capacity to respond to those incentives
  • Performance only improves if the front line workers who actually deliver care, and their managers, do their jobs differently

Additional Reading:

Preker AS and A Harding. Eds , Innovations in Health Service Delivery: The Corporatization of Public Hospitals (2003)

A. S. Preker, A. Harding, and P. Travis, "Make or buy" decisions in the production of health care goods and services: new insights from institutional economics and organizational theoryBulletin of the World Health Organization. 2000; 78(6): 779–790.

Harding AL and AS Preker. Eds, Private Participation in Health Services (2003)

Jakab M, A Preker, A Harding and L Hawkins, The Introduction of Market Forces in the Public Hospital Sector: From New Public Sector Management to Organizational Reform (June 2002)

Loevinsohn, B and A Harding, Contracting for the Delivery of Community Health Services: A Review of Global Experience (Sep 2004).

Deber, Raisa, Private Delivery and Public Goals: Mechanisms for Ensuring that Hospitals Meet Public Objectives ( May 2004).

Rethelyi JM, E Miskovits and MK Szocska, Organizational Reform in the Hungarian Hospital Sector: Institutional Analysis of Hungarian Hospitals and the Possibilities of Corporatization (Jan 2003).

Lieberman, SL and P Marzoeki, Health Strategy in a Post-Crisis, Decentralizing Indonesia  (Dec2002)

di Gropello E, Decentralized Systems of Health Care Delivery and the Role of Large Cities: A Comparative Analysis (July 2002).

Harding A and AS Preker, Understanding Organizational Reforms: The Corporatization of Public Hospitals (Sep 2000)

Naylor CD, P Jha, J Woods and A Sheriff , A Fine Balance: Some Options for Private and Public Health Care in Urban India (1999)

Preker A and A Harding, The Economics of Public and Private Roles in Health Care: Insights from Institutional Economics and Organizational Theory (Jun 2000)