Message 1: Recognize that sustainability is about more than just money

efficiency and access to quality services. Finally, rigorous third-party verification of results is another introduction by PBF that is necessitated by its direct relationship to the subsequent budget and the risks of gaming associated with the use of self-reported administrative data for making payments. Linking payments to verified outputs can be costly, but it has been particularly popular among donors who appreciate the direct relationship between payment, results, and accountability. Because of the popularity of the PBF mechanisms among donors, the overall investment in health in LMICs is likely to have increased.

This chapter builds on past experience to provide a forward-looking perspective. The following four messages emerge: (1) sustainability of interventions, particularly those geared at revamping the financing of entire health systems, is critical and about more than just money; (2) the four facility tenets—provider autonomy, financial management capacity, unified payment systems, and output orientation—should be systematically supported to build health systems; (3) PBF incentives should be understood in the broader health financing context; and (4) the potential of technological advances to facilitate provider payment reform should be better examined and exploited. These key messages call for the development of a new research agenda that is more focused on the design and implementation of PBF reforms and their role in health systems strengthening.

Fiscal space for health is always constrained, but this is particularly the case as countries are struggling with the economic consequences of COVID-19 and increased expenditure pressures across all sectors. Domestic contributions to PBF engagements may therefore become more difficult to mobilize, although they may provide essential contributions to basic primary care services, and many of these reforms are recognized as quintessential for health system reform by academics and practitioners alike (Barroy et al. 2019). As long as the PBF engagement is conducted in parallel to regular PFM processes, such financial contributions may be at risk. As governments can no longer afford to finance both the regular budget and offbudget schemes, the off-budget schemes are likely to be cut. If PBF reforms were financed through off-budget schemes, this risks the sustainability of the reforms. If all the aforementioned changes (provider autonomy,

flexibility of fund use, output orientation of budget, and so forth) relate only to the PBF financing streams, all of this risks being undone and the health system might return to the legacy PFM processes.

Therefore, sustainability is not only about whether funds are directed to off-budget PBF schemes and whether such PBF schemes have been “institutionalized” in a systematic manner. Rather, the question should be whether PBF principles (or, more broadly, facility financing principles) are mainstreamed into general PFM practices. PFM reform is a longer term endeavor, and changes tend to occur incrementally (Diamond 2013). However, once changes are made, they become difficult to reverse; therefore, if PBF principles can be mainstreamed into PFM structures, these will likely be sustainable. For example, on the one hand, a facility may receive funds directly through an off-budget PBF scheme, which empowers the facility while this financing modality is in place, but it also disappoints when it is undone. On the other hand, if facilities are recognized explicitly in the budget, it becomes necessary to discuss facility budget allocations through the legislative process, and decisions must be made that carry the force of law. The budget is a legal instrument and should be implemented; if it is not, questions will be asked by the legislature. Once this process is set up, it will become difficult to reverse, especially once facility managers and communities realize the benefits.

It will be important to understand the current PFM environment and how facility financing principles can be aligned. A recent paper proposes a diagnostic framework on how to identify the current state of alignment to PFM systems and how to develop a reform roadmap (Piatti-Fünfkirchen, Hadley, and Mathivet 2021). Exploring where and how PBF differs from PFM systems and identifying what reforms could be pursued offer an opportunity for mainstreaming PBF principles and therefore strengthening sustainability. Some PFM reforms, such as the introduction of program budgeting, may lend themselves particularly well to mainstreaming PBF principles. Careful attention will be required for fully understanding how a program budgeting reform will be implemented and how it can reflect PBF principles. This will require active collaboration of PFM and health finance practitioners.

For countries with off-budget social health insurance (SHI) schemes, the PBF experience can be fully absorbed within the SHI. In this case, it may not be necessary to align PBF with the PFM system, but clear separation of functions is necessary to facilitate sustainability. It is then necessary to determine clearly what services can be financed through PFM structures