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Introduction
Decentralization involves the dispersion of power, functions and finances from a central authority to regional and local authorities. Decentralization reforms have become widespread in low- and middle-income countries, mainly due to movements towards democratization, the spread of multi-party electoral systems and transitions towards market economies. In particular, decentralization of financing systems, particularly for health, is now a common aspect of reform in these countries. The main advantage is the dynamism it can bring into the resource allocation mechanism; it also can facilitate re-allocation of funds through a visible, vibrant and bottom-up approach.1 Besides bringing in additional financial and human resources, it can also improve utilization of existing health-care resources such as staff.
This paper looks at the potential for decentralization to lead to better health workforce recruitment, performance and retention in rural areas through the creation of additional revenue for the health sector; better use of existing financial resources; and creation of financial incentives for health workers. This paper also considers the conditions under which decentralized health financing systems can lead to improved health workforce retention, using examples from several countries, including Brazil, China, Costa Rica, Guyana, India, Kenya, Pakistan, the Philippines, Romania, Rwanda, Thailand, Uganda, the United Republic of Tanzania and Zambia.
Decentralization of health financing
According to the rationale of decentralization, smaller local entities that have more autonomy and funds can better respond to local needs and may also better manage human resources. As explained in Fig. 1, decentralized health financing systems are built around one or more of the three main sources of health-care finance: ministry of health, local government and the community. Where the decentralized health financing system relies on more than one source, the sources are seen to be interdependent (as indicated by two-headed arrows in Fig. 1). In some countries with decentralized health systems, such as China, India, the Philippines, Uganda and the United Republic of Tanzania, all three sources of funding for health exist but under different types of decentralization. In that context, financial incentives that aim to improve health workforce recruitment, performance and retention can stem from each source of funding. According to the mandate and aims of the different sources of funding, the nature of these financial incentives may vary.
Decentralization, where it involves the...