Performance-based financing: Shush, it is about reform!

1. Performance-based financing: Shush, it is about reform! CERDI, 17/12/2009 Agnès Soucat (World Bank), Bruno Meessen (Institute of Tropical Medicine, Antwerp)

2. Outline • PBF under the fire: a review of the criticisms. • It is about reform : PBF as a potential game changer for health systems in low income countries.

3. Several drives for critiques against PBF (1): the perspective • Personal fear, suspicion, ( hostility?) towards payment against performance / economists: very present among public health doctors (often outliers in terms of values and professional ethos, even within the medical profession). • Philosophical / normative view: ‘fair pay for fair work’, output-based payment would be an unfair method to pay people. Legitimate as any normative view, as long as: • (1) one does not deny the fact (e.g. the situation of all self-employed around the world; fees-for-services in the health sector;most unions are not against bonus); • (2) culturally tainted: different individuals / societies may have a different view than Western people, experts or unions. • Vested interest: health staff: « pay us a high salary and trust us »; input-based financing can be comfortable also for the aid sector / the health authorities. • From the desk / from the field.

4. Absenteeism plagues primary schools and health facilities

5. Several drives for critiques against PBF (2): the evidence • Lack of supportive evidence in LIC: but constrained by the lack of experiences in LIC. Obviously, evidence must start somewhere. • « Evidence in HIC is not that supportive »: a major mistake in terms of external validity of findings: institutional arrangements and incentive structure are so different. • Difficulty to attribute impact: a major effort is made by some actors in terms of impact evaluation. • Interpretation of evidence: we feel that while many good achievements are reported, researchers stress/speculate on the negative effects.

6. Several drives for critiques against PBF (3): the dynamic • Concern about over-enthusiasm; PBF as the new hype; the new mode in international aid. An issue and a risk indeed, and the World Bank is contributing to the surge of enthusiasm. • Misunderstanding on the objective and rationale: PBF seen as an isolated strategy (our focus). • Misunderstanding of what is going on: opinions based on what is published; some PBF authors are too narrow on their explanation. • Misinterpretation of what is said: PBF as the only cause of improvement of MDGs in Rwanda; PBF as a magic bullet; PBF as a strategy without side effects.

7. Several drives for critiques against PBF (4): the theory • Providers in multi-tasking set-up: they will deliver what is remunerated; overlook what is not. The very logic of PBF; the problem is that PBF remunerates only what is measurable; are we measuring what really matters? Not everything that matters can be measured. The main limit of PBF? How do health professional make decisions when paid based on inputs: rationing ? Cientelism? Skirting? • Gaming (cheating): an issue for any monitor, but indeed the risk is higher when a reward is linked to the measured performance, (moral hazard)

8. Several drives for critiques against PBF (5): the experiences • Mistakes in the design: wrong indicators (e.g. which do not measure much); insufficient effort in the monitoring (e.g. GAVI experience). • Problems of implementation: insufficient support, delays in the payment. • Cost-effectiveness of the strategy: high transaction costs (at system and facility level) ; problem of comparator • Side-effect on the system • Side-effects for users: limited evidence so far, but potentially high. • Risks: crowding-out debate (a hypothesis). • Long-term effects, path dependency. • Sustainability

9. Our point: the debate should shift away from a narrow vision of PBF • Much could be said to ‘defend’ PBF on these different points. • Much could be said also to ‘defend’ the current process. • Our aim here is mainly here to outline our broader view on PBF : PBF is much more than an instrument to improve ‘indicators’ which are remunerated (« MDG paradigm »), it fits in a broad reform vision.

10. PBF in a reform perspective • Health system • Public health services • Governance of health care facilities • Health labour market • Public finance • Governance of the public sector

11. Strenghtening the health system • Requires the MoH to develop its role as steward, purchaser and regulator. • Can reorientate health care providers towards high impact interventions (allocative efficiency). • Can be very complementary to CBHI and be a major tool to move towards universal coverage (including by being the mechanism to remunerate providers delivering free health care). • A mechanism to manage the distortion due to monies from Global Health Initiatives. • Improve the performance of the public health facilities (see below) • Allow to integrate the private sector? • Put the public and the private not for profit on a same foot.

12. Rwanda: Effect on MDGs High Impact Interventions

13. Increase in utilization of high impact services Trends in assistance at delivery : Years 2000, 2005, 2007 Percentage (%) of women delivered by a health professional

14. Reforming public health system and its health service delivery • Higher coverage and quality of care. • Can increase integration between different levels of the health services (referral…). • Can increase staff productivity (technical efficiency) • Can improve equity (e.g. equity bonus for working in remote areas). • Put pressure on ancillary units (e.g. central medical store, programs). • Improves the accuracy and responsiveness of the health information system.

15. Reforming governance of health care facilities • A natural evolution of insitutional development in developing countries: • Builds on and complementary to the Bamako Initiative; • the ‘Great Lakes model’ = extending the logic of fees, to preventive services (with a quality component), we ‘just’ change the identity of the payer (a third-party payer instead of the user). • Is a response to the need to establish a flow of public subsidy to facilities serving the poor • Induces a clarification of respective functions; reduce conflict of interest • is complementary to greater autonomy of health facility managers (decision rights on inputs). • A role for the community actors in terms of accountability (cf. Burundi). • Institutional autonomy is key

16. Reforming health labour market • A reform which can be complemented by other reform (cf. Rwanda) • A potential response to the limits reached by postcolonial civil service systems • Increase staff motivation, reduce absenteeism, stabilise the personnel • Value entrepreneurship

17. Total health personnel in publicly funded facilities has almost doubled in 3 years …

18. Financing has more than tripled in four years (going from USD 7.5 to 30.3 millions, of which the PBF has grown more than tenfold from USD 0.8 to 8.9 millions)

19. Delivery at the health facility increased overall in Rwanda, but 7% more in PBF facilities between 2006-2008….

20. Reforming public finance for health • Consistent with budget support (but also SWAp). • Resources are brought to the frontline providers, no leakage. • Consolidate the position of the MoH in front of the MoF (relatively to other sectors for which PBF is less relevant): clear link between funding and outcome

23. Log Expenditures • Randomization balanced baseline • Follow-up balanced, so difference in follow-up outcomes due to incentives not resources

24. Reforming governance of the State and the public sector • The split of functions reveals that the MoH should not control all the ‘knobs’. • A better view on which decision and earning rights should be decentralised at local level (on the ‘how’ not on the ‘what’!). A lot of wrong has been done by public finance and ‘decentralisation’ experts. • More broadly a wonderful entry point to reform the general governance in poorly governed countries (the stress on performance and the obligation to deliver results).

25. Strengthening accountability in the health sector in Rwanda PERFORMANCE BASED, CASH AND IN KIND INVESTMENT INPUT SUBSIDIES TRANSFERS NATIONAL GOVERNMENT LOCAL GOVERNMENT VOICE Performance CONTRACTS Umushyikirano, Citizen Report Cards, Ombusdman CLIENT POWER Clients / Citizens AUTONOMOUS FACILITIES PROVIDERS COMMUNITY GOVERNANCE COMMUNITY HEALTH WORKERS PROVIDERS COMMUNITY HEALTH INSURANCES Mutuelles

26. CCL: PBF fits a broader effort to revise property rights • PBF is part of a broader reform agenda. • This agenda aims at consolidating the property rights of the poor on public resources (cf. Reaching the Poor report, Meessen 2009). ‘Voice’ has limits, let us play the ‘exit’ route (Hirschman 1970). • Let us remain pragmatic and focus on our objectives. • Having the broad view will indeed avoid ill-designed PBF experiments / policies.