As part of its health reform programme, the Zambian government has made second and third-level hospitals autonomous, with the aim of improving the quality and efficiency of hospital services, and of encouraging\ud hospitals to develop fee-paying services to generate additional revenue for the hospital sector. However, the extent to which it is possible to generate additional revenue depends on the demand for hospital services when they are priced at full cost-recovery levels. There is also\ud concern that autonomous hospitals may pursue revenue generation at the expense of access for those who cannot afford to pay net revenue generating fees. The objectives of this paper are to:\ud • examine the factors affecting the demand for hospital services\ud • assess the ability to pay for services in the public and private sectors\ud with the aim of understanding the capacity of the market to support\ud the development of fee-paying services in public hospitals\ud • assess the health care decision making of poor people and to determine threshold prices and other variables, at which they lose access to hospital services
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