The Corporatization of Public Hospitals

Abstract

Heavy investment over the past 30 years has made the hospital sector the largest expenditure category of the health system in most developed and developing countries. Despite shifts in attention and emphasis toward primary care as a first point of contact for patients, in most countries, hospitals remain a critical link to health care, providing both advanced and basic care for the population. Often, they are the provider "of last resort" for the poor and critically ill. Although it is clear that hospitals play a critical role in ensuring delivery of health services, there is much less agreement about how to improve the efficiency and quality of care provided. With increasing frequency, hospital autonomy, corporatization, and even privatization, are being considered and applied to improve performance of publicly run health services. The objective of this publication is to yield some insights about these popular reform modalities from a review of the literature, reform experiences in other sectors and empirical evidence from hospital sector itself. The review examines: (a) what problems these reforms are attempting to address; b) the core elements of the reforms; and, c) why they are structured the way they are (why their designers think they will resolve certain problems)? While this paper focuses on issues related to the design of the reforms, the paper also reports the findings from a larger study that examined the implementation and evaluation of such reforms so that they will be available to countries that are considering venturing down this reform path.