1

PERFORMANCE – BASED FINANCING IN THE HEALTH SECTOR: RELEVANT

AND FEASIBLE IN LOW-INCOME COUNTRIES?

An international workshop (17 December)

Bruno Gryseels, director of ITM, and Bruno Meessen (ITM), one of the co-organizers of this

workshop, welcomed the participants of this workshop, gave some background, and outlined the

aims and objectives of the day.

The director pointed out that Primary Health Care – a key message for the 21st century,

underlined recently in an ITM colloquium - has to be delivered one way or another. From this

point of view, Performance Based Financing (PBF) could be a tool, now that evidence is

accumulating.

Among other things, Bruno Meessen emphasized the importance of the so-called ‘short route’ of

accountability to make services work for poor people, i.e. through ‘exit’. This enables users in

their relation with providers. One of the tools that could be used in this short route is PBF. The

workshop would focus more on supply-side mechanisms than on demand-side approaches.

It was stated that the approach, pioneered in Haiti in the late 90’s, is currently acquiring new

dimensions (see Norway), in other words, that the approach is in a transitory and probably crucial

period. Obvious is also that there are potentially big risks in the approach (‘power of incentives’).

So PBF is a tool, not a magic bullet.

Because the Rwanda-experience made clear that a coalition of actors and stakeholders is

absolutely vital to make things work, an expert workshop was convened in Antwerp. One of the

aims, besides getting an overview of the evidence base so far in various countries, was to set up a

network of PBF experts, as well as brainstorming on ways to move forward. A side-activity was

organized on December 18th

, that focused on Central-Africa.

Speakers

Agnès Soucat (World Bank) outlined – in order to set the general background for the workshop -

the MDG progress (and lack of it) so far. The world is not on schedule to reach the targets. This

lack of progress contrasts with the fact that there is actually a wide range of very effective (and

low-cost) interventions available: (1) household and community level interventions, (2)

population oriented interventions and (3) individual clinical interventions. She pointed out that

well-designed policies to boost growth and human development outcomes often fail miserably in

practice, due to various things that can and do go wrong on the long way from central

government over local government and providers to communities and clients. She suggested

Results-Based Financing as a way to deal with this problem, on each level, as a way to overcome

every bottleneck: Results based Aid, Results based Planning and Budgeting, Results Based

Contracting, Results Based financing, bonuses, conditional cash transfers, …. She gave a brief

overview of this approach in Ethiopia and Rwanda.

2

Bruno Meessen (ITM) gave an economic perspective on how to get the incentive-structure right

in public health systems in low-income countries. He pointed out that the performance of

government-owned health facilities is often low, and mentioned that one of the key (and often

overlooked) reasons for this lies in the institutional arrangements that are in place. He pleaded for

a second chance for the health district strategy and a reform of public health systems, taking into

account an institutional economics perspective on (more efficient and less naive) institutional

arrangements. He developed ten concrete propositions to do this. Health care performance should

not be seeked anymore, like before, through ex ante command and ex post control/exhortation,

but through the ex ante establishing of a link between the delivered performance/behaviour and

the attributed economic resources.

Agnès Soucat filled in for Paulin Basinga (School of Public Health, Kigali), who was supposed to

give a presentation on the PBF experience in Rwanda between 2002 and 2008. She stressed that

PBF was one of the reforms (next to for example Community Health Insurance) in a very

conducive environment with strong political leadership. She gave a chronological overview of the

PBF pilot experiments, the scaling up, evaluation and institutionalization. The results were also

outlined: increases in the volume and quality of services, an increase of staff productivity and

boosted enthusiasm and motivation. Three reforms that took place in 2000-2008 were stressed:

autonomization of health facilities, Performance Based Budgeting & Transfers and

decentralization. A thorough impact evaluation was also presented. She finished by giving an

overview of the lessons learned on PBF, among others: start with easy things, and go

progressively towards complexity; strong leadership and political will from authorities is crucial;

institutionalization was the key phase, etc.

In the discussion after this first session, some people pointed out that PBF capitalized on a very

conducive environment in Rwanda, and asked the question whether Rwanda can be considered as

a typical example of PBF or, on the other hand, should be seen as an outlier. Mrs. Soucat stressed

that, in spite of being indeed an outsider in some respects (strong government, excellent IT

environment), one can nevertheless draw some useful lessons from the Rwanda-experience. For

example, the fact that the authoritarian government does not use the typical command & control

approach, as was customary in the past, but uses a new approach to reach health results,

embodying the vision of a small government that contracts out. The Rwanda experience also

suggests that PBF can work in a low-government environment, as the pilots run by NGO’s were

already quite successful when the presence of the government was still rather limited.

After the coffeebreak, Rena Eichler (Broad Branch) elaborated on P4P (Pay for Performance)

Design and Implementation considerations. She sees P4P as a health system strengthening

strategy. In her opinion, P4P can work, there is mounting evidence on this, but the devil is in the

details. More in particular, she went into detail on the Design, Start-up Investments necessary,

Ongoing operations and Learning agenda. She ended her presentation with some important

mistakes that need to be avoided at all cost.

Olivier Basenya (School of Public Health, Bujumbura) outlined then the experience of Burundi

with PBF. His lecture focused on the rationale behind PBF in Burundi (i.e. to deal with severe

health system challenges), the fact that PBF is also in Burundi embedded in a context of other

reforms, the implementation process, the role of regulation and the institutional set-up and the

3

main results so far. He finished by giving future perspectives and key challenges for the

approach, among others the institutionalization of PBF.

In the discussion after this second morning session, the pertinent question was asked what

happens to not-PBF districts, i.e. the ones with other types of financing (input-financing). A link

was also made with the past (the Bamako Initiative), when, according to one participant, the

problems were not technical but more in terms of the way to establish accountability and

transparency. Central drug procuring units were the Achilles’ heel in those days. People should

learn from history, in other words. The question to what extent PBF can be community-based was

also asked; in Haiti PBF is slightly community based – they have community health workers as

well as community days. Another participant mentioned that targets should be set by HC’s

themselves, as this creates ownership.

In the afternoon sessions, the idea was to go beyond case-studies to get a broader view of the

PBF evidence base. Nicolas de Borman (Aedes) sketched a panorama of recent experiences with

performance-based financing in low-income countries. An overview of PBF interventions in

several countries was presented, and some of the main trends were distinguished. Which

countries, for how long have they been put in place, how do the schemes function, how large are

they, … More in particular, the Haiti experience, Cambodia and Central-African experiences

(Rwanda, Burundi, DRC) were worked out and the current expansion of Rwanda-style schemes

elsewhere was indicated. However, people should not forget the existence of other output based

financing schemes (like voucher systems – he gave the particular example of Kenya) and targeted

interventions (ex. Madagascar). Performance based financing, he concluded, has proved to be

successful and adaptable in different environments and is a rapidly growing trend. It is not a

single model, but a flexible approach that evolves. The key challenge is scaling-up and

institutionalization.

Piet Vroeg (CORDAID) gave an overview of the PBF experiences of CORDAID in Sub Saharan

Africa, in other words, PBF from the perspective of an international civil society organization.

CORDAID sees PBF as a tool for empowerment, i.e. to change power relations. Starting from

realizing the problem, that investments in health systems have not brought the expected results in

terms of equity, effectiveness and efficiency, Cordaid advocates a solution that replaces input

financing by PBF. CORDAID has or has had PBF projects in several countries (Rwanda, RDC,

Tanzania, Zambia, Burundi, CAR, …) so far, and is planning more (for example, in Cameroon).

In an eloquent and exhaustive way, Vroeg pointed out the many valuable lessons that have been

learnt by his organization, in terms of context, sustainability, financial access, quality, civil

participation, scaling up and performance. He ended his presentation by summarizing what the

future focus of CORDAID in this PBF debate will be.

Karel Gyselinck (BTC) was the last speaker of this first afternoon session. He dwelled on the

experience of the BTC in Cambodia with Performance Incentive Contracts. The set-up of PBIS

was elaborated on, as well as the results so far, and some lessons that can be drawn. He

concluded that, combined with other strategies (like HEF, Training etc.) implemented, PBIS

contributed significantly to the motivation of the health personnel and hence to increased

utilization of health services and coverage rates. After outlining what the future will bring,

Gyselinck also asked some general questions on performance monitoring.

4

In the discussion after this first afternoon session, one of the questions raised, dealt with the fact

that West-African are lagging in terms of PBF experiments and innovation. Reasons for this have

to do with the ‘contagion effect’ (successful Rwanda experience), the fact that West-African

health systems are a bit more conservative and more reluctant to change, and the role that NGO’s

play in PBF. NGO’s, that by their nature tend to operate more in post-conflict countries, often

play a trigger role (in these very countries) for PBF. Donor resources are more easily found in

Central Africa in other words. Another question was asked on height of the transaction and

verification costs; the CORDAID representative estimates them in most cases between 20 to 30

%, but in extreme cases as much as 40 %.

After yet another coffee break, three organizations and institutions gave their view on PBF and

the way they implement it. Ingvar Olsen (NORAD), started with an outline of the Norwegian

involvement in Result Based Financing. Their starting point was the MDG’s 4 and 5, RBF is part

of a larger package in other words. He elaborated on the World Bank Trust Fund (HRIG, with

activities in Afghanistan, Eritrea, Rwanda and Zambia among others), the bilateral MDG4 and 5

programme (an initiative by the Norwegian Prime Minister to contribute towards the health

millennium development goals, with activities in Tanzania, India, Pakistan and Nigeria); also the

Norwegian support for GAVI and their role in the Global Fund for AIDS, TB and Malaria was

mentioned.

Amie Batson (World Bank) elaborated a bit more on the World Bank Result-Based financing

Trust Fund, and made it clear that the aims of the World Bank include improving health results

through strengthening health systems, as well as boosting the effectiveness of Overseas

Development Aid. Like Olsen, she emphasized that RBF can be used at any level, but must

eventually trickle down to the point of contact between the provider and household in order to

impact results. She focused on the Health Results Innovation Trust Fund and its scope of

activities.

Jean Perrot from WHO Geneva was the last speaker of the day and gave a brief presentation on

the performance of health providers, and the various ways and strategies to reach this common

goal. He pointed out that what we are actually talking about in most cases is health provider

performance (micro level), not about health system performance. Resorting to incentives is a new

strategy, taking into account that other strategies from the past (sanctions, professional values)

have yielded only modest results. He dwelled on the Rwanda and on the Mali hospital model.

PBF is more difficult to implement in stable countries (with strong trade unions) than in post-

conflict areas.

In the brief question-and-answer session afterwards, people raised the objection: what will

happen if PBF fails to these health workers, who will have gotten used to higher salaries. The

answer was that it is vital that key decision makers and stakeholders (including the unions, like in

Benin) are involved in the process, that there is a real commitment from governments, so that

PBF is not really just an ‘experiment’. The need for quality indicators was also put forward, as

well as the fact that part of the PBF ‘effect’ could be due to the novelty of supervision, that is put

in place for the first time. At last it was pointed out that there is a real buzz around PBF at the

moment, but that it remains important not to generalize too easily from success in one country to

5

other contexts. Different things might make sense in different environments. PBF is just a tool in

the toolbox. And a few failures at this crucial time could actually kill the buzz.

Some ideas on how to move forward

We ended the day with a discussion on how to move forwards.

• setting up a panel / pool of experts. This panel could play a very useful role, for example,

when a team is involved in the design process of PBF in a country or is negotiating with

the government. The team could feed questions back to the pool of experts.

• (Organize another event, disseminate documents, network ?)

• Trying to figure out why it did NOT work in some contexts (like in Tanzania). More case

studies are needed, and impact evaluations.

• Also with a view on these impact evaluations, better designed pilots are crucial, to acquire

real evidence. So the focus should remain (for a while) on learning, rather than on

implementation. Maybe a joint learning effort, focusing on specific issues, should be

organized. Countries with longer PBF experience should be documented. Maybe the

rather exhaustive list of question marks (from CORDAID) could be used to scrutinize

these longer existing projects. There is also more scientific proof necessary on efficiency

(through controlled studies for example).

• Let researchers (maybe phd-students from the South) make a thesis on data. Burundi is a

case in point, as well as Cambodia. So many data are available, unfortunately academics

don’t always find the time to analyze them. And there is the additional problem of

unclean data.

• Pragmatism (‘things should work’) was advocated, instead of confining oneself to one

academic school of thought. This remark was countered with the claim that you need first

reliable, good evidence on which you can then have a good academic discussion from all

angles. So more sophisticated evidence is a must. If evidence is only used as an advocacy

tool, there is a problem.

• Setting up an African health systems observatory, and engage in capacity building in

Africa (for example, guide African students from these countries). If there is a good

partnership, the money will follow – “money follows solutions, not problems”.

• In a final remark (on the impact the Obama administration might have, in the current

financial-economic context), it was put forward that there is a good chance that big

programs (like PEPFAR) will be reorientated to some extent, and so that there might be

an opportunity to reorient (for example HIV-) money to broader health systems. Maybe

the growing PBF network could capitalize on this ?

Notes taken by Kristof Decoster, ITM