Health financing for universal coverage

Pay-for-performance debate: not seeing the forest for the trees


Agnès Soucat, Elina Dale, Inke Mathauer, Joseph Kutzin

Publication details

Editors: World Health Organization
Number of pages: 6
Publication date: April 2017
Languages: English



Over the past 10 to 15 years, results-based financing (RBF) has gained increased prominence in global health. Though the term RBF encompasses a variety of demand- and supply-side incentives to increase output or enhance access and quality, defined as financial incentives to hospitals, physicians, and other health care providers “aimed at improving the quality, efficiency, and overall value of health care.” The term performance-based financing (PBF) has acquired a wider use in low- and middle-income countries (LMICs) and refers to supply-side financial incentives where payment depends explicitly on quantity of services delivered and “on the degree to which services are of approved quality, as specified by protocols for processes and outcomes.” PBF may not only target health facilities but also include ministries of health, local governments, provincial and district health teams, and central medical stores. Though terminologies may differ, at their core, PBF or P4P is a provider payment mechanism, which uses information on provider activities and the health needs of the population they serve to drive resource allocation in order to maximize societal objectives. For purposes of this commentary, we will use the term P4P to refer to this mechanism.

The commentary argues that it is crucial to pay greater attention to the “forest”—that is, overall health system reforms and how provider payment arrangements interact with these to influence health outcomes, as opposed to looking almost solely and more narrowly at the “trees”—that is, the details and impact of a P4P mechanism divorced from the underlying health system. P4P is a category of strategic purchasing, the effectiveness of which depends critically on its connections with the wider environment of purchaser–provider relations. The commentary unpacks the potential health system benefits of P4P. It outlines concerns around the current P4P debate that has too often focused on the trees (e.g., specific payment arrangements focused on boosting a few indicators) but ignoring how these fit within and are affected by the wider forest (larger health system reforms). It concludes by suggesting some ways forward as to policy framing and country reform.

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