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¡ªspecifically maternal and child healthcare¡ªin 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¡ªlike transparency, accountability, and decentralized frontline financing.
Damien de Walque is a Lead Economist in the Development Research Group (Human Development Team) at the World Bank. He received his Ph.D.in Economics from the University of Chicago in 2003. His research interests include health and education and the interactions between them. His current work is focused on evaluating the impact of financial incentives on health and education outcomes. He is currently evaluating the education and health outcomes of conditional cash transfers linked to school attendance and health center visits in Burkina Faso.
Eeshani Kandpal is a Senior Economist in the Development Research Group of the World Bank. Her research examines two types of financial incentives: (1) cash transfers to poor households and (2) pay-for-performance contracts with health workers and facilities to improve the provision of primary health care. She is particularly interested in design elements like the targeting mechanisms of cash transfers and optimal pricing regimes for health service delivery as well as spillovers from incomplete contracts or targeting methods. She is an associate editor for the American Journal of Agricultural Economics and a lead author of the forthcoming World Bank Policy Research Report titled Financial Incentives for Effective Coverage in Health.
Norbert Schady, a German national, is Chief Economist for Human Development in the World Bank Group. Previously, he was Principal Economic Advisor, Social Sector, at the Inter-American Bank (2010-2021), Senior Economist in the Development Research Group (2003-2010), Economist in the Poverty Group of the Latin America region of the World Bank (2000-2003), and a Young Professional at the World Bank (1998-2000). Mr. Schady has also taught at Georgetown University and Princeton University. He received his PhD from Princeton University and his BA from Yale University.
Deon Filmer is Director of the Development Research Group at the World Bank. He has previously served as Acting Research Manager in the Research Group, Co-Director of the World Development Report 2018: Learning to Realize Education¡¯s Promise, and Lead Economist in the Human Development department of the Africa Region of the World Bank. He works on issues of human capital and skills, service delivery, and the impact of policies and programs to improve human development outcomes¡ªwith research spanning the areas of education, health, social protection, and poverty and inequality. He has published widely in refereed journals, including studies of the impact of demand-side programs on schooling and learning; the roles of poverty, gender, orphanhood, and disability in explaining education inequalities; and the determinants of effective service delivery.
Cover of the forthcoming Policy Research Report "Improving Effective Coverage in Health: Do Financial Incentives Work?"
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¡ªa measure of service delivery that meets a minimum standard of quality¡ªremains 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¡ªthe performance pay component in particular¡ªare 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.
