The private sector (both for-profit and not-for-profit) plays an important role in most of the world’s health systems. Its role is expanding in many countries. The private sector provides a mix of goods and services including: direct provision of health services (the focus of this document), medicines and medical products, financial products, training for the health workforce, information technology, infrastructure and support services (e.g. health facility management). As a result, most countries have “mixed health systems”—where a mix of public and private providers deliver health-related goods and services. The governance arrangements deployed to steer mixed delivery differ greatly from those used to manage systems that exclusively rely on public services.

In countries with well-established regulation of the private sector and good regulatory capacity, governments use a range of regulatory and financial policy tools to steer mixed delivery of health services in the public interest, for example the use of capitation contracts to manage service access and service costs. In contrast, in countries where the development of private sector regulation is limited and regulatory capacity is not strong, the private health sector and mixed health systems often do not voluntarily operate in a way that is consistent with a country’s health goals and objectives. This is a problem that goes back at least 25 years in the context of efforts to increase private sector involvement in health care.