What is Performance-based Financing?
Performance-based financing (PBF) is an approach to structuring the flow of resources to pay for results—desired goals, outcomes, and impacts—rather than simply paying for processes or reimbursing activity costs. In using a performance-based approach, the purchaser transfers to the provider (or contractor) significant power and authority over strategies and activities, and also the potential for reward or loss (respectively, as goals are met or if performance does not meet agreed-upon targets).
MSH is a leader in designing and implementing performance-based financing programs that achieve health impact, improve quality, strengthen health systems, and are effective at all levels of a health system.
MSH works on various levels of PBF, including working with governments, private organizations, and funding agencies to develop and implement their own initiatives by strengthening management capacity, estimating costs, setting fees, developing performance indicators linked to interventions that are proven to improve health, and bolstering systems for information and financial management. MSH has proven that PBF can increase use and quality of health care services, stabilize or decrease costs of these services, help use limited resources effectively, and improve staff motivation and morale (a proven incentive for staff retention).
The MSH PBF Approach
MSH manages performance-based grants and contracts and provides technical assistance to governments, private organizations, and funding agencies to develop and implement their own PBF programs. These programs align with donor requirements and local circumstances, and maximize synergy by sharing tools, approaches, and systems.
Performance-based financing is a relatively new results-oriented and practical approach that ties payments to achievement of agreed-upon, measurable performance targets with verifiable indicators and provides incentives for meeting or exceeding the expected results. Incentives include financial payments, bonuses, and public recognition. Sanctions for non performance include withholding or not awarding bonus or payments, termination or reduction of agreement, public disclosure of poor performance, disbarment from participating in future work.
In addition, MSH uses five key strategies to strengthen health systems and reach public health impact goals: effective management of performance contracts; host country capacity building; quality improvement of health services; strategic use of data; and, ensure sustainability including community involvement to increase demand and participation.
MSH is unique in offering a combination of technical knowledge and practical experience to successfully implement PBF programs. MSH has supported the design and implementation of PBF for health care in 14 countries on three continents and these programs focus on MSH's priority areas, including HIV & AIDS, maternal, newborn, and child health; family planning and reproductive health; and primary health care services. Many of the programs were designed and are being implemented with technical assistance from MSH PBF programs in other developing countries.
MSH's Experience in PBF
Currently MSH is operating nine Performance-Based Financing projects in eight countries, including Eastern, Central, and Western Africa, as well as Central America. The focus of these projects is to improve the quantity and quality of health care services, and MSH works to achieve those goals through a variety of channels.
For example, in Honduras, through AIDSTAR-Two the project is working to provide HIV & AIDS services to the most at risk populations. In Haiti, through Santé pour le Développement et la Stabilité d'Haïti Project (SDSH), PBF is used throughout the private sector to administer HIV & AIDS, family planning, and maternal, newborn, child health services to nearly half of Haiti's population. In the Democratic Republic of the Congo, MSH is using PBF to strengthen the integration of primary health care services through the Integrated Health Program.