An overview of research on the effects of results-based financing
Systematic review
|Updated
Key message
- The terms result-based financing and pay-for-performance (P4P) are used interchangeably. The Working Group on Performance-Based Incentives suggests the following working definition for P4P: “Transfer of money or material goods conditional on taking a measurable action or achieving a predetermined performance target.”
- There are few rigorous studies of results-based financing (RBF) and overall the evidence of its effects is weak.
- Conditional cash transfers and other types of economic incentives targeting healthcare recipients can increase the use of preventive services.
- Financial incentives can also influence professional practice, such as increasing the delivery of immunisations or screening.
- RBF is typically part of a package of interventions and it is difficult, if not impossible to disentangle the effects of RBF from other components of the intervention packages, including increased funding, technical support, training, new management structures and monitoring systems.
- The flows of money required for RBF may be substantial, including the incentives themselves, administrative costs, and any additional service costs.
- There is almost no evidence of the cost-effectiveness of RBF.
- RBF can have unintended effects, including motivating unintended behaviours, distortions, gaming, corruption, cherry-picking, widening the resource gap between rich and poor, dependency on financial incentives, demoralisation, and bureaucratisation.
- RBF can only be cost-effective if the intervention or behaviour it is intended to motivate is cost-effective and worth encouraging and there is low compliance with the desired behaviour.
- Financial incentives should be designed to motivate desired behaviours based on an understanding of the underlying problem and the mechanism through which financial incentives could help.
- Financial incentives are more likely to influence discrete individual behaviours in the short run and less likely to influence sustained changes.
- The mechanisms through which financial incentives given to governments or organisations can improve performance are less clear.
- RBF schemes should be designed carefully, including the level at which they are targeted, the choice of targets and indicators, the type and magnitude of incentives, the proportion of financing that is paid based on results, and the ancillary components of the scheme.
- Stakeholders should be involved in the design of RBF.
- The focus should be on addressing important health system problems in order to achieve health goals – i.e. starting with the problem, not the solution.
- RBF should be used if it is an appropriate strategy to help address priority problems and goals.
- For RBF to be effective technical capacity or support must be available and it must be part of an appropriate package of interventions.
- RBF schemes should be monitored, among other things, for possible unintended effects, and evaluated, using as rigorous a design as possible to address important uncertainties.
Summary
Norway is the lead promoter of results-based financing (RBF) as one of five actions being taken as part of the Global Campaign for the Health Millennium Development Goals and plans to support the use of RBF through the World Bank and in bilateral agreements with selected countries focusing on achieving the Millennium Development Goals (MDGs) of reducing child and maternal mortality (MDG 4 and 5).
The terms result-based financing and pay-for-performance (P4P) are used interchangeably. The Working Group on Performance-Based Incentives suggests the following working definition for P4P: “Transfer of money or material goods conditional on taking a measurable action or achieving a predetermined performance target.”
RBF-schemes can be targeted at different levels: recipients of healthcare, individual providers of healthcare, healthcare facilities, private sector organisations, public sector organisations, sub-national governments, and national governments.
This report summarises the results of the first phase of a two phase project with the objectives of undertaking a review of RBF research in the health sector and outlining the field.
Method
This report consists of an overview of systematic reviews and a critical appraisal of four evaluations of RBF schemes in the health sector in low and middle-income countries (LMIC). In addition, key informants were interviewed to identify key literature relevant to the use of RBF in the health sector in LMIC, key examples, evaluations, and other key informants.
Results
Ten systematic reviews that met the inclusion criteria for this report were summarised. In addition, four evaluations of RBF schemes in LMIC were critically appraised, including financial incentives targeted at patients, individual providers, organisations, and governments.
There are few rigorous studies of RBF and overall the evidence of its effects is weak.
Financial incentives targeting recipients of healthcare and individual healthcare professionals appear to be effective in the short run for simple and distinct, well-defined behavioural goals. There is less evidence that financial incentives can sustain long-term changes.
The use of RBF in LMIC has commonly been as part of a package that may include increased funding, technical support, training, changes in management, and new information systems. It is not possible to disentangle the effects of RBF and there is very limited quantitative evidence of RBF per se having an effect, other than in the context of conditional cash transfers to poor and disadvantaged groups in Latin America to motivate preventive care.
Evaluations suggest that RBF may have contributed to improvements in the number of mothers delivering at an accredited institution in India, NGOs delivering basic healthcare in Haiti, TB detection and cure rates, and immunisation coverage. It is not possible to determine how much RBF contributed to improvements and there have not been consistent improvements in the indicators that have been used.
RBF can have undesirable effects, including motivating unintended behaviours, resulting in distortions (ignoring important tasks that are not rewarded with incentives), gaming (improving or cheating on reporting rather than improving performance), corruption, cherry-picking patients that make it easier to reach targets and earn bonuses and selecting out more difficult patients, widening the resource gap between rich and poor, dependency on financial incentives, demoralisation due to feelings of injustice, and bureaucratisation.
Discussion
There is limited evidence of the effectiveness of RBF and almost no evidence of the cost-effectiveness of RBF. RBF can only be cost-effective if the intervention or behaviour it is intended to motivate is cost-effective and worth encouraging.
If RBF is used, the financial incentives should be designed to motivate desired behaviours based on an understanding of the underlying problem and the mechanism through which financial incentives could help. Based on the available evidence and likely mechanisms through which financial incentives work, they are more likely to influence discrete individual behaviours in the short run and less likely to influence sustained changes. Although financial incentives given to governments or organisations may improve performance, the mechanisms through which they work are more variable, difficult to predict and uncertain.
In designing RBF, careful consideration should be given to the level at which financial incentives are targeted, the choice of targets and indicators, the type and magnitude of incentives, the proportion of financing that is paid based on results, and the ancillary components of the scheme. Key stakeholders should be involved in the design of RBF.
Policy makers and other key stakeholders should focus on addressing important problems to achieve priority health goals. Deciding how best to do that should begin with the problem, not with the solution. RBF should only be used if it is an appropriate strategy to help address important problems with performance in order to achieve health goals. RBF schemes are only likely to be helpful if a lack of motivation or resources is at least partially responsible for the underlying problems and financial incentives can be effectively targeted to motivate changes in behaviour at whatever levels these are needed.
If RBF is used, for it to be used effectively, and to avoid unintended effects, technical capacity or support must be available and RBF must be part of an appropriate package of interventions.
Given the lack of good quality evidence about the effects and cost-effectiveness of financial incentives, and the risk of unintended effects, ongoing monitoring of RBF schemes is critical to determine whether incentives are working and whether they are having unintended effects. To discern the effects of financial incentives from the package of interventions of which they normally are one part, rigorous evaluations are needed. When possible, randomised trials are ideal because they can control for the many possible confounders and they may give answers more quickly as well as more reliably. In addition, both quantitative and qualitative process evaluations are needed, given the complexity of most interventions, behaviours and systems.