IntroductionOne of the principal goals of any health care system is to improve health through the provision of clinical and public health services. Decentralization as a reform measure aims to improve inputs, management processes and health outcomes, and has political, administrative and financial connotations. It is argued that the robustness of a health system in achieving desirable outcomes is contingent upon the width and depth of ‘decision space’ at the local level. Studies have used different approaches to examine one or more facets of decentralization and its effect on health system functioning; however, lack of consensus on an acceptable framework is a critical gap in determining its quantum and quality. Theorists have resorted to concepts of ‘trust’, ‘convenience’ and ‘mutual benefits’ to explain, define and measure components of governance in health. In the emerging ‘continuum of health services’ model, the challenge lies in identifying variables of performance (fiscal allocation, autonomy at local level, perception of key stakeholders, service delivery outputs, etc.) through the prism of decentralization in the first place, and in establishing directed relationships among them.MethodsThis focused review paper conducted extensive web-based literature search, using PubMed and Google Scholar search engines. After screening of key words and study objectives, we retrieved 180 articles for next round of screening. One hundred and four full articles (three working papers and 101 published papers) were reviewed in totality. We attempted to summarize existing literature on decentralization and health systems performance, explain key concepts and essential variables, and develop a framework for further scientific scrutiny. Themes are presented in three separate segments of dimensions, difficulties and derivatives.ResultsEvaluation of local decision making and its effect on health system performance has been studied in a compartmentalized manner. There is sparse evidence about innovations attributable to decentralization. We observed that in India, there is very scant evaluative study on the subject. We didn’t come across a single study examining the perception and experiences of local decision makers about the opportunities and challenges they faced. The existing body of evidences may be inadequate to feed into sound policy making. The principles of management hinge on measurement of inputs, processes and outputs. In the conceptual framework we propose three levels of functions (health systems functions, management functions and measurement functions) being intricately related to inputs, processes and outputs. Each level of function encompasses essential elements derived from the synthesis of information gathered through literature review and non-participant observation. We observed that it is difficult to quantify characteristics of governance at institutional, system and individual levels except through proxy means.ConclusionThere is an urgent need to sensitize governments and academia about how best more obje...