Service providers need flexibility, not for arbitrary purposes, but so that they can respond
to well-defined incentives – that is, so the incentives defined by organizational and institutional
arrangements can be effective instead of being frustrated by rigidities. The growing
awareness of the structural nature of problems in hierarchical service delivery systems has
led policy-makers in many countries to examine the incentive environment of organizations
and alter the distribution of decision-making control, revenue rights, and financial risk among the different participants, as analysed in The world health report 1999 (16).