Performance-based financing in the heath sector in low- and middle-income countries: Is there anything whereof it may be said, see, this is new?

Abstract

Whereas performance-based financing (PBF) is now developing fast in the health sector in low- and middle-income countries and is presented an innovative approach-concomitantly, subject to a separate research stream-it shares many features of the "managing for results" (MfR) and performance-based budgeting (PBB) currents that have existed for decades. In this paper, we first argue that PBF as currently developed in the health sector in low- and middle-income countries shares many features and thus can be viewed as an avatar of MfR and more precisely PBB. Secondly, we draw lessons from the literature on MfR and PBB so as to (1) better apprehend PBF conceptually and (2) avoid pitfalls and better design PBF schemes in practice. We argue that the lessons from the theoretical and empirical literature on MfR and PBB offer interesting insights to feed into a "theory of change" of PBF, enabling to analyse critical aspects and better design PBF schemes. Moreover, it is hoped that just like MfR processes have been demonstrated as having the potential to boost individual performance not only through links with financial incentives but also through acting on other sources of motivation, one can demonstrate more accurately by which mechanisms the various elements of the PBF package can help improve health sector results.

Keywords: low- and middle-income countries; managing for results; performance-based financing.