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The case for performance-based incentives

13 Jul 2009

Posted by: Paul Chinnock - Editorial Team

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Can the quality of health services in developing countries be improved if aid donors make the level of their funding dependent on the performance achieved by health facilities and health workers? The case in favour of this controversial approach - known as performance-based incentives - is argued in a book published by the Centre for Global Developmen (CGD).

The authors of the book, Rena Eichler and Ruth Levine, say:

“Global health donors, like national governments, have traditionally paid for inputs such as doctors’ salaries or medical equipment in the hope that they would lead to better health. Performance incentives offered to health workers, facility managers, or patients turn the equation on its head: they start with the performance targets and let those most directly affected decide how to achieve them. Funders pay (in money or in kind) when health providers or patients reach specified goals. Evidence shows that such incentives can work in a variety of settings.
But making them effective requires careful planning, implementation, and monitoring and evaluation.”

The authors argue their case on the basis of case studies in countries where the new approach has been introduced including Mexico, Nicaragua, Haiti, Rwanda, and Afghanistan. The improvement in the motivation of staff emerges as a key factor. The book points out that problems do arise with this type of funding but suggestions are made as to how such pitfalls may be avoided.

A 10-minute video explaining the concept is available on the CGD website. An 8-page briefing document is also available. The individual chapters of the book may be obtained online. A paper copy of the complete book can be purchased.

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