Introduction

CHAPTER 5

Performance-Based Financing Improves Coverage of Reproductive, Maternal, and Child Health Interventions

Introduction

The goal of universal health coverage is to develop health systems that provide all people access to services without inflicting financial hardship in paying for them. This goal was stated by the World Health Organization (WHO) in 2005 and has led to sustained investments in and technical assistance to health systems in low- and middle-income countries (LMICs) (WHO 2010). Nonetheless, 17 years later, the sustainable financing of health systems remains a central challenge on the path to universal health coverage (English et al. 2016; Reich et al. 2016). Analysis by the Brookings Institution estimates that LMICs face an annual financing gap of US$370 billion to reach Sustainable Development Goal 3, ensure healthy lives and promote well-being for all at all ages. This gap is particularly acute in SubSaharan Africa, which accounted for 16 percent of the world’s population, 3 percent of the global health force, 23 percent of the global disease burden, but only 1 percent of total global health expenditures in 2015 (Ogbuoji et al. 2019; African Union 2014). A WHO report on health financing in Africa notes that the strategies and mechanisms underpinning health financing systems can pose problems (WHO 2013). For instance, in about half of all African countries, at least 40 percent of total health

expenditure is in the form of household out-of-pocket payments. Flows within existing public financial management systems can be skewed toward urban areas and specialized care even though primary health care reform has long been a focus of government and donor efforts to expand access to care (WHO 1978).

In addition, public financial management systems may not be aligned with health financing reforms, and public expenditure tracking systems can be clogged, both leading to staggering delays in salary disbursements. This can lead to detrimental effects on worker satisfaction and motivation, in turn leading to the provision of poor care (Diamond 2013). Perhaps unsurprisingly, then, an additional challenge in these contexts is the financing of high-quality health systems. Indeed, only relatively recently has ensuring high-quality care become a focus of donor and international organization effort (WHO 2013, 2018). Nonetheless, chapters 2 to 4 of this report highlight how LMICs, especially those in Sub-Saharan Africa, continue to face significant gaps in the provision of effective coverage, particularly high-quality health services for maternity care. Chapters 3 and 4 further suggest that while structural and knowledge gaps persist in health service delivery, the underprovision of effort by health workers explains a large portion of low quality of care. Turning to strategies to improve effective coverage and the quality of health service delivery, this chapter reviews much of the previously published evidence on how financial incentives, on both the demand and supply sides, have improved health utilization rates. The chapter focuses on a widespread approach to supply-side financial incentives in the form of performance pay. Typically, in LMICs, performance pay is incorporated into performance-based financing (PBF) approaches, which consist of performance pay and other critical features, including public financial management reform, health facility autonomy, decentralization, supportive supervision for the frontlines, and community engagement. PBF has been described as “a tool for helping create better, more inclusive, and more accessible health services” (Fritsche, Soeters, and Meessen 2014, 2). This chapter and chapter 6 assess whether performance pay and the overall PBF approach have indeed delivered “better” care, by studying their impacts on structural and process quality as well as health outcomes, care that is “more inclusive,” by assessing the evidence on equity impacts, and care that is “more accessible,” by examining coverage and effective coverage.

The chapter starts with an overview of performance pay and provides a theoretical framework that explains why performance pay may improve

effective coverage. It then summarizes the recent evaluative evidence, including from the World Bank’s investments in PBF approaches in LMICs, such as impacts on quality of care and equity. This overview of the evidence also considers the evidence on the impacts of PBF on service utilization, equity, and the quality of care, using the know-can-do gap framework described in chapter 3. The impact evaluations tied to PBF projects funded by the World Bank suggest that PBF interventions have had, at best, mixed impacts on health service coverage and clinical quality. The observed gains are not pro-poor as the relatively wealthy can better respond to improvements in facility quality and often return from the private sector to the public sector in response to investment in the public sector. In contrast, because a key criticism of performance pay is that it might erode health worker motivation (Paul et al. 2018), the chapter conducts a systematic and well-identified multi-country analysis of the impacts of PBF on health worker motivation and satisfaction.1

As discussed in chapter 3, two key obstacles to improving effective coverage are (1) the quality of care and (2) the staffing of facilities and provision of health services in poor and remote areas. To address the first concern, in most of the PBF pilots, facilities received an additional quality bonus based on their performance on a quality scorecard that was designed to measure performance on indicators of structural and process quality rather than simply the quantity of services provided (see, for instance, Kandpal et al. (2019) for an overview of the implementation of this quality bonus in the Nigerian PBF pilot). In addition, in many instances, facility managers were provided training twice a year on the best practices in facility management and financial administration. To address the second concern, many of the PBF interventions studied here provided an additional bonus tied to the facility’s remoteness—often this bonus could be substantial, up to 40 percent of the quarterly payment before the bonus—depending on the distance from the local administrative headquarters. Finally, as part of the accountability aspect of PBF pilots, the reported levels of targeted services as well as the associated payments were published online on national PBF portals (Fritsche, Soeters, and Meessen 2014).

In addition, because the goal is efficient and equitable delivery of highquality health services, PBF programs in LMICs often include additional components beyond performance pay. In the programs studied in this chapter, the PBF payments are also typically accompanied by additional financing for infrastructure, supplies, and consumables, which are

disbursed directly to the health facility. This can be an important departure from business-as-usual in primary health care provision in LMICs. Further, as implemented in health care in LMICs, PBF interventions are generally part of a broader health system reform that includes autonomy, supervision, monitoring, and community oversight or engagement in facility management (Meessen, Soucat, and Sekabaraga 2011; Renmans et al. 2017). When these interventions were piloted in LMICs and subsequently rolled out, it was widely believed that such composite and overarching interventions were especially suited for revitalizing health system performance in lowincome settings. Public health experts believed that PBF could catalyze comprehensive reforms and help address structural problems such as lack of responsiveness, inefficiency, and inequity. Performance pay for providers combined with autonomy of decision making at the individual health facility level was considered a radically different approach that could simultaneously alleviate worker absenteeism, lack of resources, and accountability (Meessen, Soucat, and Sekabaraga 2011).

However, these programs are not without criticism. A few critics have questioned the use of PBF given the complexity of implementing it relative to decentralized financing approaches. Similarly, questions have been raised about its impacts on equity and the heterogeneity in payment schemes and program design, making it difficult to extrapolate impacts and leaving the effectiveness of the intervention particularly vulnerable to implementation fidelity (Paul et al. 2018; Ridde et al. 2018; Ireland, Paul, and Dujardin 2011). Another criticism concerns the role of donor agencies in promoting PBF approaches, and it has been argued that at times donor agencies have overridden local demands or even needs to push for PBF. Critics have argued that such a “donor-driven agenda” limits the systemwide and longterm impacts of PBF programs because it essentially becomes a short-run intervention that lacks stakeholder ownership. Indeed, a central criticism of performance pay—and by extension PBF—is that it can damage health systems through detrimental impacts on worker motivation (TurcotteTremblay et al. 2016; Lohmann, Houlfort, and De Allegri 2016). This line of criticism posits that by paying for specific tasks, performance pay crowds out the intrinsic motivation of health workers, who should be pro-socially motivated (Paul et al. 2018; Ridde et al. 2018). The critics argue that when the donor finances run out, all the health system is left with is an unmotivated taskforce and no sustained gains to health outcomes or even service delivery.