Can performance-based financing be used to reform health systems in developing countries?

Over the past 15 years, performance-based financing (PBF) has been implemented in an increasing number of developing countries as a means of improving health worker performance. This article resists viewing PBF as a strategic tool to reform the health sector. The paper argues that such an economically-driven intervention does not adequately respond to patient and community needs, upon which health system reform should be based.

The document shows the following facts and findings in terms of PBF: 

• PBF seeks to improve the health sector by changing the organisational structure of the health system with regards to its financing mechanisms, information systems, planning, monitoring and evaluation.
• PBF has international support because it fits neatly into the Millennium Development Goals aid paradigm for rapid progress on a few key indicators.
• the debate surrounding PBF is biased by insufficient and unsubstantiated evidence that does not adequately take account of context nor disentangle the various elements of the PBF package.
• it is very difficult to evaluate PBF, considering that it is a comprehensive intervention in a complex, context-specific system.
• a range of technical as well as contextual constraints can significantly hinder PBF implementation (e.g. flexible public finance management system and methodological challenge).
• in addition to the extra funding needed to pay incentives and thus increase health-worker earnings, the transaction costs of PBF implementation are necessarily high.
  

Conclusions are as follows:

• the relative success and interest in PBF suggest that it has a role to play in improving health-worker performance.
• still, in most cases there is a need for new bodies or structures of PBF, and strengthening of existing structures, as well as addressing PBF financial sustainability.
• a more comprehensive evaluation, supported by clear evidence, should be used to inform the debate about PBF.