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The theory of contracting out requires that there must be a degree of competition in a market. However, in practice, markets need only be 'contestable', i.e. that it be possible for competitors to enter a market. However, it is argued that health services, due to their very nature of economies of scale and high start-up and sunk costs have characteristics of monopolies, making it very difficult for other providers to compete fairly. Moreover, there is substantial bureaucracy to entry with much infrastructure being donor funded. As a result, it is increasingly difficult for a private institution to gain an economic edge to entry in such a market. Moreover, economies of location are likely to reduce real efficiency, especially when considering tertiary services e.g. logistics. These problems are likely to be present with greater emphasis in developing countries, as 1) there is acute shortage of private healthcare funding, 2) most care is provided by NGO's and 3) many remote areas are completely cut-off from some medical services.

Contestable markets should allow identification and under-cutting of inefficiency by more resourceful entrepreneurs. In developing countries, price cuts frequently result in quality reductions. It is unclear as to whether contracts will sacrifice quality for price when bidding on contracts. Therefore, it seems logical that quality conditions to healthcare should be outlined prior to contract bidding. Even after successful winning of contracts, there needs to be frequent monitoring of performance. It is doubtful that developing nations have adequate systems to monitor such information. Brazier and Normand (Brazier and Normand 1991) further identified that trust and integrity must exist between all party's a factor which is near impossible due to the large-scale corruption existing in many aspects of political and social life.

Contracts involve skills and activities that are not required under public provision such as accounting, negotiating and monitoring (McPake 1994). Most healthcare systems in developing countries are unable to accommodate these needs.

The essential element of contracting assumes that public finances are available to purchase services from a private provider. However, in reality many developing countries simply do not have the levels of public sector money to afford this model of healthcare. As a result, other means of revenue generation must be achieved. Principally this will be through larger levels of taxation. However any policy which results in the population (most of whom are already living below the poverty line) having less take-home money is certain to be unpopular. An alternative may be combining public and private expenditures or by limiting certain aspects of healthcare so that those deemed to need healthcare provisional the most are treated preferentially to all others. Lastly, a model similar to that in the USA may be considered. Preferred Provider Organisations (PPO's) are private insurance companies who act within the contracting model to purchase healthcare. Providers register with PPO's and those insured by PPO's have access to healthcare, often at lower prices than uninsured persons but have restrictions to the use of certain providers (Brazier and Normand 1991). Alternatively, nations with extensive insurance organisations can provide 'contract-like' mechanisms allowing them to choos本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。