Contracting for Health: Evidence from Cambodia

In 1999, Cambodia contracted out management of government health services to NGOs in five districts that had been randomly made eligible for contracting. The contracts specified targets for maternal and child health service improvement. Targeted outcomes improved by about 0.5 standard deviations relative to comparison districts. Changes in non-targeted outcomes were small. The program increased the availability of 24-hour service, reduced provider absence, and increased supervisory visits. There is some evidence it improved health. The program involved increased public health funding, but led to roughly offsetting reductions in private expenditure as residents in treated districts switched from unlicensed drug sellers and traditional healers to government clinics. We are grateful for comments from Jeff Kling, Esther Duflo, Abhijit Banerjee, Angus Deaton, Sendhil Mullainathan, Ben Olken, Karthik Muralidharan, Emily Oster, and seminar participants at the BREAD Conference (May 2006), the IMF Institutional Reform Conference (July 2005), the LEaF Conference (May 2005), Columbia University, New York University, the Project on Justice, Welfare, and Economics at Harvard, and the Harvard Development Lunch. We also thank Loraine Hawkins, Krang Sun Lorn, Sao Chhorn, Peng Kok, Char Meng Chor, Sheryl Keller, Fred Griffiths, Rob Overtoom, Bart Jacobs, Gerry Pais, Reggie Xavier, Jim Tulloch, Steven Schomberger, and Sabine Heinrich for their insight into the contracting project and health care in Cambodia. Clingingsmith acknowledges support from the Project on Justice, Welfare, and Economics at Harvard University.