The objective of this study is to analyze the effectiveness of GovernmentPolicy on Contracting out Midwives at Health Centers in District of Donggala, CentralSulawesi-Indonesia. The study applied the direct distribution method for cost allocation. It wasobtained from the total provider (government) cost such as labor costs, utility costsand operating costs from the budget of Maternal and Child Health Care Project (ProyekPeningkatan Pelayanan Kesehatan Masyarakat). The cost was the true cost of deliveryservices to patients or target population with regard to Maternal and Child Healthcare program. This study employs a purposive (non-probabiiity) sampling by choosing 11subdistricts of 17 subdistricts in the District of Donggala. Two villages were chosenfrom each of the 11 subdistricts. One has a Contracted Midwife and another has aCivil Servant Midwife to represent its subdistrict. This study found that Contracted Midwives consumed the higher proportion ofcost compared with the Civil Servant Midwives during their training until they work.The percentage of difference in the effectiveness of the Contracted Midwivesperformance compared with the Civil Servant Midwives was considerably small but thepercentage of difference on the costs consumed between the Contracted Midwives andthe Civil Servant Midwives was considerably high. Each Contracted Midwife acquiredthe higher fringe benefits and salary than that of each Civil Servant Midwife but theperformance among them was not so much different. It is recommended that the policy of contracting midwives should be reformeddue to this policy can not produce the expected outcomes. Also the government shouldreconsider the policy on providing the higher proportion of fringe benefits andsalary that the Contracted Midwives acquired. For example, the higher proportion offringe benefits could be related to the utilization rate of services they performed.The higher utilization rate can significantly reduce the average cost of activity andwill increase the effectiveness ratio as well. This study could be of some practical use as it can introduce ideas andinformation to policy makers of Ministry of Health, managers of Maternal and ChildHealth care program and managers of Human Resources Development Division of Ministryof Health. It would be vital to refer and operate more studies in order to apply theresults of this research into their works.