Evaluating the impact of contracting out basic health care services in the state of Sao Paulo, Brazil

As a means of dealing with shortcomings in the coverage, quality and efficiency of the public health care sector, several municipalities in the state of Sao Paulo, Brazil, have started to contract pre-certified non-profit or non-governmental organizations to take part in the delivery of health care services. This paper explores the impact of introducing these contracts in the primary health care sector. Using data on the 645 municipalities in the state of Sao Paulo and difference-in-differences methods, we estimate the effect of contracting out in the primary health care sector on various dimensions of mortality and health care use. The results show that implementation of the contracting out strategy significantly increases the number of primary health care appointments by approximately one appointment per user of the national health care system per year. Point estimates indicate a reducing effect on hospitalization for preventable diseases.