Dawid Szecio, Ph. D.

Assistant Professor
Public Administration Research Group
Faculty of Law and Administration
University of Warsaw
dawid.szescilo@uw.edu.pl

Decentralization in health care. Brief overview of the European debate

Evolution of health care system in welfare state impact of new public management
In the first half of twentieth century health care system was focused primarily on
quarantining patients (isolation) rather than treatment1. The explosion of welfare state after
Second World War reoriented and significantly expanded the scope of health services (as well
as other human services) and responsibilities of the state for managing the health conditions
of the society. The welfare state of post war times emerged from the lessons of the war and
economic depression years that preceded global military conflict. For at least two decades
(1950s and 1960s) it has provided in Western countries an effective combination of free
market economy with extensive social protection and mitigation of markets failures.
Economic crisis of 1970s that affected all Western economies invoked, however, the welfare
states demise and fostered transformation of public health care systems2.
The most influential policy response to the welfare states crisis emerged from the
neoliberal theory of economy, state and society. The foundations of this doctrine reflects
Margaret Thatchers slogan about rolling back the state, i.e. decline of public spending
(especially for human services), contracting out public services, privatization and
deregulation. In public administration theory this new version of laissez-faire of classical
liberalism has been conceptualized as new public management (NPM). NPM includes two
major dimensions of the reform of the public sector: a) the expansion of market-oriented
mechanisms in public service delivery; and b) managerialism the transfer of managerial and

1
A. Dodds, Comparative Public Policy, Palgrave Macmillan 2013, p. 114.
2
A. Hemerijck, Changing Welfare States, Oxford 2013, p. 5.

1
organisational techniques and models developed in the private sector to public
administration3.
New public management gained the status of global leading paradigm in public
management, contributing to increasing convergence of administrative systems across the
world. Neoliberal agenda influenced also the transition in post-socialist countries in Central
and Eastern Europe, including Poland. The global impact on new public management resulted
primarily from policy transferring projects imposed by international organizations
coordinating and supporting economic transition in numerous countries The World Bank,
International Monetary Fund or Organization for Economic Co-operation and Development4.
Extensive privatization, marketization and deregulation stimulated by those institutions were
the core of NPM reform toolbox.
In health care and other areas of human services the wave of NPM reform brought
increasing number of private provides and implementation of market-based mechanisms for
organising service delivery (contracting out, public-private partnerships). As a result, in CEE
region it is widely accepted that the primary care, specialised ambulatory care and pharmacy
sectors should belong to private sector, and privatisation has been or is almost completed5.
Polish reforms of health care system exemplify also introduction of market-based instruments
in organising health services funding by the state. The health services are contracted out on
the basis of competitive tendering procedure carried out by state agency (National Health
Fund, NFZ). One of the fundamental principles of contracting out is equal right of both
private and public providers to obtain contract and perform services funded by NFZ. Polish
legislation also declares customers freedom of choice every patient has right to choose the
service provider according to his/her own preferences6.

Decentralization definition and expected outcomes

New public management was focused not only on market-oriented reforms and limiting
the states responsibilities for social welfare. One of the key elements of managerial reforms

3
C. Hood, A public management for all seasons?, Public Administration 1991/1, p. 5; T. Christensen, P.
Laegreid, New Public Management: Puzzles of Democracy and the Influence of Citizens, Journal of Political
Philosophy 2002/3, p. 270; M. Vabo, New Public Management. The Neoliberal Way of Governance,
Rannsknarritgeroir/Working Papers, no. 4, 2009, p. 3.
4
L. R. Jones, F. Thompson, From Bureaucracy to Hyperarchy in Netcentric and Quick Learning Organisations,
Charlotte 2007, p. 12.
5
J. Nemec, C. Lawson, Health Care Reforms in CEE: Processes, Outcomes and Selected Explanations,
NISPAcee Journal of Public Administration and Policy 2008/1, p. 30.
6
See more on current framework of Polish health care system: E. Nojszewska, System ochrony zdrowia w
Polsce, Warsaw 2011.

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included into NPM programme is d e c e n t r a l i z a t i o n of public management.
Decentralization simultaneously with greater competition in public sector, downsizing,
introduction of private-sector management styles, outsourcing creates the basic set of public
management instruments promoted by new public management7. Although there is a
consensus among NPM advocates on benefits of decentralization, the concept itself seems to
be vague and heterogeneous. Classic definition of decentralization developed by Rondinelli et
al. refers to transfer of responsibility for planning, management, and the raising and
allocation of resources from the central government and its agencies to field units of
government agencies, subordinate units or levels of government, semi-autonomous public
authorities or corporations, area-wide, regional or functional authorities, or non-governmental
private or voluntary organizations8.
This definition represents extremely broad concept of decentralization, including four
different processes:
Deconcentration dispersing some tasks to territorial branches of central
government. It is clearly technical operation aimed at improving the efficiency
of central government without empowering local or regional communities.
Delegation transferring some responsibilities to local or regional government
units that enjoy some scope of autonomy, yet are ultimately accountable to
central government.
Devolution form of extensive decentralization based on transferring
responsibilities and authority from central level to autonomous unit of
local/regional government; and
Privatization engaging private entities (commercial or not for profit
organizations) in public services delivery, mainly on contractual basis9.
Extensive approach to defining decentralization is not shared by all scholars. For the
purposes of this article decentralization will be referred only to process identified by Pollitt
and Bouckaert as political decentralization i.e. transferring powers and responsibilities to
from the central government to autonomous public law bodies, primarily regional/local self-

7
J. Alonso, M. Clifton, D. Diaz-Fuentes, Did new public management matter? An empirical analysis of the
outsourcing and decentralization effects on public sector size, COCOPS Working Paper, no. 4, 2011, p. 6.
8
D. A. Rondinelli, J. R. Nellis, Assessing Decentralization Policies in Developing Countries: A Case for
Cautious Optimism, Development Policy Review, no. 1, 1986, p. 5.
9
D. A. Rondinelli, J. R. Nellis, G. S. Cheema, Decentralization in Developing Countries: A Review of Recent
Experience, World Bank Staff Working Papers, no. 581, 1983, p. 13-31; J. Litvack, J. Ahmad, R. Bird,
Rethinking Decentralization in Developing Countries, Washington: IBRD 2005, p. 4-6.

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government units10. Narrower definition of decentralization is widely approved among Polish
public law and public administration scholars and emphasizes political and social context of
this process, not reducing this only to technical operation oriented on more efficient
management11. What is more, it is also consistent with constitutional concept of
decentralization envisaged by Article 15 of the Polish Constitution.
Decentralization was one of the pillars of transformation of the Polish state initiated in
early 1990s. Reforms aimed at disaggregation of monolithic, extremely centralized structure
of government affected all key areas of public management, including provision of public
services. Decentralization movement in post-socialist Europe was not linked to NPM
programme, yet was based on similar objectives and rationale. Advocates of decentralization
in Poland argued that public services can be managed effectively only at local level.
Empowering local communities also triggers citizens energy and encourages to active
involvement in policy making and implementation. Furthermore, decentralization was also
meant to let the central government focus on strategic issues and long-term policy planning
instead of dealing with day-to-day services delivery to citizens12.

Decentralization in health care objectives, rationale and forms

Vast majority of above-mentioned expected benefits of decentralization may be also
referred to this process in health care. Most comprehensive international comparative study
on decentralization in health care specifies the following objectives and rationale for this
process:
Improving technical and allocative efficiency thanks to reducing levels of bureaucracy,
greater cost consciousness, and better matching of public services to local preferences;
Empowering local governments through enabling more active local participation in
policy making and services delivery;
Enhancing the innovation of service delivery thanks to creating conditions for local
policy experiments;
Increasing accountability through public participation in policy making and
implementation, and transformed role of central government;

10
C. Pollitt, G. Bouckaert, Public Management Reform. A Comparative Analysis, Oxford 2004, p. 87.
11
See: H. Izdebski, M. Kulesza, Administracja publiczna. Zagadnienia oglne, Warsaw 2004, p. 135; S.
Fundowicz, Decentralizacja administracji publicznej w Polsce, Lublin 2005, p. 138.
12
A. Piekara, Aksjologiczne i pragmatyczne aspekty samorzdu terytorialnego, Samorzd Terytorialny 1991/1-2,
p. 78-79; M. Kulesza, Transformacja ustroju administracyjnego Polski (1999-2000), Studia Iuridica
2000/XXXVIII, p. 82; J. Regulski, M. Kulesza, Droga do samorzdu. Od pierwszych koncepcji do inicjatywy
Senatu (1981-1989), Warsaw 2005, p. 75-76.

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 Increasing quality of health services and equity to be enhanced by allocating resources
according to local needs and enabling local organizations to better meet the needs of
particular groups13.
It has to be noted that decentralization in health care may concern various elements of
the process of health services delivery. Mills lists six tasks that can be subject of
decentralization: revenue raising (securing public funds for health services, particularly
through taxation), policy-making, planning, resource allocation (e.g. contracting), funding of
service provision and interagency and intersectoral coordination14. According to Szecios
cycle of public services provision the catalogue of functions that can be decentralized might
be simplified and limited to four critical areas:
Strategic stewardship - setting institutional and legal framework for health services
delivery, long-term, strategic planning, identifying and predicting global and domestic
trends and developments and health care needs;
Financing - collection and distribution of public funds for health care;
Delivery - providing the services directly to citizens and managing institutions
responsible for service delivery;
Monitoring and evaluation - continuous supervision over the quality of services,
accountability mechanisms and developing ideas for improvements. It needs to be
underlined that the model will not be limited to one particular scheme, but will include a
set of options for each phase of health services delivery cycle15.
As a result, the actual scope of decentralization/centralization of health care systems
needs to be examined with reference to each of crucial functions and elements of health
services provision process. For instance, Polish health care system represents highly
centralized approach to strategic stewardship and financing (both raising funds and
allocation). On the other hand, it is decentralized in terms of service delivery (hospitals
management) with leading role of local self-government units.

Failed promises of decentralization in health care?

13
V. Bankauskaite, R. B. Saltman, Central issues in the decentralization debate, in: R. B. Saltman, V.
Bankauskaite, K. Vrangbaeck (eds.), Decentralization in health care, Open University 2007, p. 16.
14
A. Mills, Decentralization and accountability in the health sector from an international perspective: what are
the choices?, Public Administration and Development 1994, vol. 14, p. 286.
15
D. Szecio, Rynek konkurencja interes publiczny. Wyzwania prawne urynkowienia usug publicznych,
Warsaw 2014.

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 Although the expectations towards decentralization in health care are well-established,
sufficient empirical evidence is still missing to explore the effects of decentralization in health
care, particularly verify the above-listed objectives in practice. The results of existing studies
are mixed. For instance, study based on data from 22 OECD countries suggests nonlinear
effects of decentralization on health outcomes measured by infant mortality rate. As a result,
Kang, Cho and Jung admit that decentralization is not a magic recipe to health outcomes.
They also underline that successful decentralization relies on a number of factors of complex
nature political, cultural, organizational, even psychological16.
According to Moscas research focused on sample of 20 OECD countries, decentralized
health care setting tends to swell total health care expenditure. Findings of this study
undermine one of the fundamental arguments in favour of decentralization more efficient
allocation of public funds for health care17. The same author points out the following side
effects and risks associated with extensive decentralization of health care based on the
experience of Spain, Italy and Norway:
Decentralization may create significant obstacles for cohesive national health policy
because of the number of (quasi-)autonomous actors prioritising their specific interests
and ignoring the perspective of the whole health system.
Decentralization enhances blame game between central and local/regional
governments. In fragmented and complex network of actors responsible for various
aspects and areas of health services provision it is extremely difficult to identify the
entities liable for errors.
Extending the responsibilities of local/regional authorities needs to be accompanied
with transfer of knowledge and capabilities enabling local/regional public managers to
perform their new tasks18.
Upon a number of other studies the following risks, challenges and negative impacts of
decentralization (in health care and in general perspective) can be indicated:
Increasing inequalities in access to health care. Particularly decentralization of
responsibility for financing the health services provision may dramatically diversify the
conditions for access to health care and its quality across regions or other administrative
units. This is natural consequence of regional differences in the level of economic

16
Y. Kang, W. Cho, K. Jung, Does decentralization matter in health outcomes? Evidence from 22 OECD
Unbalanced Panel. Data for 1995-2005, International Review of Public Administration 2012/1.
17
I. Mosca, Decentralization as a determinant of health care expenditure: empirical analysis for OECD
countries, Applied Economics Letters, 2007/7.
18
I. Mosca, Is decentralization the real solution? A three country study, Health Policy 2006/7.

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 development and income. Undermining cohesion in access and quality of services
appears to be the trickiest outcome of extensive decentralization and usually requires
special legal and financial measures, like cross-subsidies. On the other hand, their
implementation creates another problem political tension between units receiving
additional subsidies and units financing them. In Poland this issue is being deliberated
now with reference to existing cross-subsidies mechanism affecting the budgetary
situation of Mazovia and other richer regions (so called janosikowe).
Diminishing the steering capacity of central government (setting goals, strategies,
framework laws, executing accountability mechanisms). Within a decentralized health
care system the central government cannot enjoy traditional instruments of vertical
coordination of policies and their implementation. In many countries the position of
local/regional self-government units is regulated in the national constitutions
guaranteeing them extensive autonomy in terms of policy making, planning and
choosing the methods of performing their tasks.
Growing concern for joined-up government and cross-cutting issues. Legally
protected autonomy of regional/local governments creates much more complicated
institutional landscape, where hierarchy has to be replaced with collaboration and
negotiation. In a network state only horizontal coordination based on cooperation
between autonomous administrative units is available.
Particular risks associated with decentralization in post-socialist states. It needs to be
stressed that CEE countries did not have well established and stable mechanisms
preventing from the negative impacts of decentralization. Local democracy in our
region is still unfinished business and extensive decentralization in most vulnerable
areas of human services (health care, education) appears to be particularly risky and
linked with numerous obstacles and challenges19.
It should be also noted that among available studies on the effects of decentralization
there is no comprehensive research focused on Poland. There is a number of publications on
various aspects of the Polish health care system, yet the complex analysis of decentralization
its scope, implications and prospects is still missing. It is clear that as a result of reforms
carried out for last two decades the role of local government became crucial in managing the

19
K. Davey, Decentralization in CEE Countries: Obstacles and Opportunities, in: G. Peteri (ed.), Mastering
Decentralization and Public Administration Reforms in Central and Eastern Europe, Budapest 2000, p. 37; J.
Kornai, Centralizacja i kapitalistyczna gospodarka rynkowa, Zarzdzanie Publiczne 2011/2-3, p. 10; C. Pollitt,
G. Bouckaert, Public Management Reform..., p. 176; V. Bankauskaite, R. B. Saltman, Central issues in the
decentralization debate, p. 16.

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health care units (hospitals) while strategic stewardship and financing the health care system
is highly centralized. Among self-governments units the key role belongs to counties
(powiaty) and cities with county rights (miasta na prawach powiatu) that manage public
health services units (hospitals) and plan local health care policies20. However, there was no
complex evaluation of the current level of decentralization and prospects for this process.
Lack of in-depth analysis in this field is also of practical significance, as intensifying
and advancing decentralization is presented in political debate as one of the key reform
strategies for the Polish health care system (parallel with enhancing privatization). National
Development Strategy 2030 adopted in 2013 prioritizes fostering the local/regional self-
governments autonomy in all areas of public policy, including health care21. National Health
Programme 2007-2015 underlines that the ideas and policy concerning public health should
be initiated primarily at local level, according to constitutional principle of subsidiarity22.
Concluding remarks
Undoubtedly, new public management brought paradigm shift in global debate on
modernization of the state and ways it performs its tasks. However, growing criticism towards
markets and lack of spectacular benefits from privatization and marketization of public
services undermine trust in NPMs slogans. The current state of the European debate on
decentralization in health care can be perceived as a perfect case study illustrating
disappointment with the practical effects of one of the pillars of NPMs reform programme.
Adverse effects of decentralization and numerous limitations of its effectiveness in this sector
create a pressing need for more pragmatic approach to the issue of optimal distribution of
responsibilities between central and local/regional governments in this sector. Ideological
assumption that decentralization enhances more efficient health services, guarantees higher
quality and correlates with better access to health care is no longer acceptable. AS WHO
report summarizes: Despite fairly substantial experience of the implementation of
decentralization policies, it is still not precisely clear what actions and conditions are
necessary for decentralization to be a success.23 the other hand, simple return to highly
centralized systems is not feasible and not desirable either.

20
See more: E. P. Wsiewicz, A. Masiakowski, Rola samorzdu terytorialnego w kreowaniu polityki
zdrowotnej, Zdrowie Publiczne 2001/4; E. Nojszewska, System ochrony zdrowia w Polsce..., M. Dercz, H.
Izdebski, T. Rek, Prawo publiczne ochrony zdrowia, Warszaw 2013.
21
Council of the Ministers of the Republic of Poland, National Development Strategy 2030. Third Wave of
Modernity, Warsaw 2013, p. 9.
22
Council of the Ministers of the Republic of Poland, National Health Programme 2007-2015, Warsaw 2007, p.
47.
23
WHO Europe, Decentralized health systems in transition, Copenhagen 2008, p. 7.

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 This article cannot deliver any recommendations for this wicked policy problem.
However, we may conclude that the NPMs era of simple responses to complex policy
challenges is over and outcomes of decentralization in health care prove that transferring
managerial philosophy to public sector management does not guarantee desired effects.
Currently dominant narrative in the European debate on this matter shows that in-depth
decentralization creates numerous policy challenges that may seriously affect the efficiency
and stability of health care systems and deteriorate equal access to health services. Therefore,
strengthening the powers of local/regional governments in this area requires adequate
institutional, legal and financial safeguards mitigating the side effects of decentralization.