Financial incentives or performance pay links payments to health facilities and workers to the quantity and quality of services they deliver. These performance incentives came on the scene in health financing as a consequence of a frustrating status quo: health outcomes have remained poor in low- and middle-income countries (LMICs) despite sustained investments in health service delivery and concomitant increases in the utilization of services over the past two decades (Eichler and Levine 2009). Performance based financing (PBF) projects, which include performance pay among other critical features, including public financial management reform, health facility autonomy, decentralization, supportive supervision for the frontlines, and community engagement, held appeal for development agencies and donors because of their explicit links to transparency and accountability. Since the late 2000s, more than US2.5 billion dollars has been invested in PBF projects in primary health service delivery in low-income countries. This report examines the evidence on the impact of performance pay specifically, and PBF projects more broadly, on coverage, effective coverage, health outcomes, as well as clinical and infrastructure quality. The report also provides cautionary primary evidence that performance pay can incentivize the provision of inappropriate, unnecessary, or irrelevant care. It argues for the integration of health care quality and efficiency measurement into health system reform, with attention paid to both the under provision of needed care as well as the provision of unnecessary or irrelevant care, which can become an important dimension of quality as health care systems matures. Taken together, these findings shed light on how program teams and policy makers may fruitfully combine demand- and supply-side financing and highlight various questions they should ask when selecting the indicators for which performance pay may be used. The report concludes with a consideration of the operational implications of these findings, especially with regard to the design of a sustainable and scalable health financing reform that aims for substantial improvement in effective coverage.
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Improving Effective Coverage in Health : Do Financial Incentives Work?
978-1-4648-1825-7 ; 978-1-4648-1847-9
DECRG: Poverty & Inequality (DECPI)
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