Join us for the launch of Improving Effective Coverage in Health: Do Financial Incentives Work?, a new World Bank Policy Research Report that builds on the rigorous body of evidence accumulated on performance-based financing (PBF) to examine the impacts of PBF and draw lessons for the future of health financing. Financial incentives and performance pay to frontline health facilities and workers have gained popularity as an innovative approach to confront the challenge of poor health outcomes in low-income countries. This approach was a significant departure from previous financing that had little link to results and accountability. PBF projects included such financial incentives as well as transparency and accountability reforms.
In this talk, report lead authors Damien de Walque and Eeshani Kandpal will review evidence on the impacts of PBF on health service delivery spanning fifteen years and nearly forty countries with a particular emphasis on the quality of service delivery. The PBF programs studied in the report have largely been implemented in primary healthcare—specifically maternal and child healthcare—in low-income countries, although the report also draws on some evidence from higher level health facilities and middle-income countries. The report documents that PBF projects produced gains in health outcomes compared to business-as-usual, but these gains did not necessarily result from the specific financial incentives and associated monitoring components of projects. Instead, impactful health financing reform may mean pivoting from performance pay while retaining other important aspects of PBF projects—like transparency, accountability, and decentralized frontline financing.
In many low-and-middle income countries, health coverage has improved dramatically in the last two decades, but health outcomes have not. As such, effective coverage—a measure of service delivery that meets a minimum standard of quality—remains unacceptably low. This forthcoming Policy Research Report examines one specific policy approach to improving effective coverage: financial incentives in the form of performance-based financing (PBF), a package reform that typically includes performance pay to frontline health workers as well as facility autonomy, transparency, and community engagement.
The report draws on a rich set of rigorous studies and new analysis. When compared with business-as-usual, in low-income settings with centralized health systems PBF can result in substantial gains in effective coverage. However, the relative benefits of PBF—the performance pay component in particular—are less clear when it is compared to two alternative approaches, direct facility financing which provides operating budgets to frontline health services with facility autonomy on allocation, but not performance pay, and demand-side financial support for health services (that is, conditional cash transfers and vouchers). Although PBF often results in improvements on the margins, closing the substantial gaps in effective health coverage is not yet within reach for many countries. Nonetheless, important lessons and experiences from the roll-out of PBF over the last decade can guide health financing into the future. In particular, to be successful, health financing reform may need to pivot from performance pay while retaining the elements of direct facility financing, autonomy, transparency, and community engagement.