Performance-based financing

Performance-based financing (PBF), often referred to as pay-for-performance (P4P) or results-based financing (RBF), refers to payment to a government, organization, or individual conditioned on taking measurable actions toward or achieving desired goals. With support from a range of donors, including The U.S. Agency for International Development (USAID), many low- and middle-income countries have used PBF in an effort to improve the quality, availability, and uptake of health services. Examples of PBF mechanisms are shown in Table 1.

Table 1. Select PBF Mechanisms

Mechanism

Definition

Example

Cash on delivery

Donors pay aid recipients based on achievement of mutually agreed upon and confirmed progress toward an overarching goal; a “hands-off” approach that allows recipients to use funds as they desire

A donor pays a national government for registered births and provides additional payments for each registered child who survives to age five

Performance-based grants

Linking grant recipient performance in predetermined areas with both access to and the amount of funding disbursed to the recipient

The Global Fund to Fight AIDS, Tuberculosis, and Malaria bases payments for phase 2 of its three-year grant on a country’s grant performance rating in phase 1

Social or development impact bonds

A public-private partnership that allows private investors to front capital for public projects that deliver social outcomes; if the project succeeds, investors are repaid by the government (social impact bonds) or an aid agency/funder (development impact bonds) with interest

In 2017, USAID – in partnership with Merck for Mothers, the UBS Optimus Foundation, PSI, Palladium, and HLFPPT – launched the world’s first health development impact bond in Rajasthan, India, to reduce the number of maternal and newborn deaths by improving the quality of maternal care in health facilities

Incentive payments to facilities or individuals

Paying public or private health facilities or individuals monetary or nonmonetary incentives based on achievement of agreed-upon performance indicators

The World Bank has supported implementation of large-scale PBF pilots in 30 countries; although programs vary, each involves paying for improved quantity and quality of services and a robust verification process

 

PBF has been applied to primary healthcare and specific maternal and child health, malaria, HIV, TB, and family planning services in many low- and middle-income countries. In the context of health and family planning in low- and middle-income countries, PBF typically refers to supply-side incentives

where payment to a health facility team is dependent on the quantity, quality, or efficiency of service delivery.

Despite widespread application and promising examples, evidence of the impact of PBF is mixed. PBF involves significant costs to verify achievement of performance indicators. Further, most PBF schemes have been externally funded, and there is a lack of evidence on how PBF schemes can be successfully integrated into domestic financing for long-term sustainability. PBF programs are continuously evolving and incorporating lessons learned in terms of effectiveness and efficiency of different approaches across health elements and health systems.

Why Is PBF Important for Family Planning?

PBF schemes present an opportunity to incentivize improved quality and access to family planning services. PBF schemes can specifically incentivize facility- or community-based providers to meet family planning service delivery and performance objectives. They can also facilitate improved support for quality family planning services at the district and supervisory levels. For example, financial incentives may encourage providers to offer family planning counseling, ensure the consistent availability of commodities, or offer a wider range of method choices to clients. They do not, however, cover the cost of services. Rather, PBF purchases service quantity and quality improvement, not the services themselves.

While family planning has long been included in PBF schemes, performance-based family planning financing raises the same concerns as discussed above. It is particularly important with family planning, however, to insure that PBF supports free and informed choice. For example, PBF initiatives should carefully consider incentive levels for family planning indicators in order to encourage counseling and provision of a broad range of family planning methods. PBF initiatives that include family planning components should also make efforts to monitor family planning provision to ensure quality standards are being met for clinical care as well as for client voluntarism and informed choice, and that validation approaches respect privacy and confidentiality.

The evidence on the impact of PBF on family planning varies. A 2014 review of 28 community-based family planning programs incorporating PBF found that only some had positive impact. However, there are examples of success. PBF initiatives in Nigeria and Zambia have showed positive results in family planning consultation and modern contraceptive use. Rwanda’s PBF program, implemented by the Ministry of Health beginning in 2005, includes family planning, and studies suggest it has increased use of family planning services and improved quality.

Snapshot: National PBF in Rwanda

Levels of Care: Health center and community levels

Performance Measures:

Health Center Indicators

     --  # of new family planning users

    -- # of continued family planning users

Community-Level Indicators

    -- # of new users referred by community health workers

    -- % of family planning users using a long-term  method

    -- # of new family planning users adopting a long-term method

Quality Assessment

     --  Quarterly assessments along 13 dimensions (e.g., hygiene, clinical protocol,  method availability)

     -- Client satisfaction surveys

Payment: Monthly fees determined by the number of new and continuing users, adjusted based on the quality assessment scores.

Impact: Monitoring of health center results and impact studies have shown a positive effect on both the number of family planning users and continuing users, as well as quality.

Resources

RBF Health
World Bank, 2014

This website includes practical information on PBF, including toolkits and evaluations of existing programs.

Health Financing
World Health Organization, 2018

Repository of useful materials and discussions on how to design PBF programs as part of broader universal health coverage reforms.

The PBF Handbook

This is one of several guides for PBF developed with the support of USAID.

Performance-Based Incentives

This publication provides specific guidance for incorporating family planning in PBF.