Making Health Care Accountable

• Author: Robert Hecht/Amie Batson/Logan Brenzel
• Position: Sector Manager/Senior Health Specialists in the World Bank's Health/Senior Health Specialists in the World Bank's Health
• Pages: 16-19

Why performance-based funding of health services in developing countries is getting more attention

Page 16

Developing countries and their international partners are increasingly adopting methods of financing health care activities in developing countries that link the availability of funding to concrete, measurable results on the ground. Such "performance-based" financing was advocated a decade ago in the World Bank's 1993 World Development Report-Investing in Health and other policy documents in the early 1990s, although relatively little practical experience with this type of financing was available. Since then, much experimentation has taken place, and we are seeing with growing clarity the important potential-as well as the challenges-of performance-based financing for achieving national and global health goals.

Governments and partner agencies are interested in performance-based financing for health for a number of reasons. First, there is a growing focus worldwide on achieving measurable results with development assistance, and performance-based financing spotlights such results. In terms of health care, these results are being closely tracked as governments and their partners strive to achieve the Millennium Development Goals (MDGs). The goals include reductions in child and maternal deaths; reductions in rates of infection from HIV, malaria, and tuberculosis; and improvements in the nutritional status of children. Governments and their partners are thus naturally attracted to the idea of providing funds for programs that achieve or make progress toward the MDGs in health or that at least show increases in some of the key services needed to reach the goals. For example, where immunization and prompt treatment of pneumonia are crucial for halting child deaths, funding for health care might be tied to advances in the coverage of these services.

Second, even though external funding for health care in developing countries is currently in excess of $8 billion a year (Michaud, 2003), substantially greater development assistance will be needed to reach the health MDGs. Politicians and legislators in donor countries are under growing pressure from their constituencies to show that development assistance budgets, in health as in other areas, are having measurable results. Partner agencies are thus seeking to increase the effectiveness of these resources by allocating them to countries and programs that demonstrate progress as measured by performance indicators.

Page 17

Box 1

Guatemala leads the way

Guatemala has successfully implemented, on a large scale, the contracting of nongovernmental organizations to deliver health services. The government started the Program to Extend Coverage of Basic Health Services (PESCB in Spanish) in 1997, soon after the end of a long civil war. The program has continued under successive administrations. By 2000, 89 NGOs under 137 separate contracts provided health care to about 3.7 million of Guatemala's population of 14 million.

The contracts specify a range of maternal and child health services and prevention and treatment of a number of diseases, including malaria. The NGOs are paid about $8 for each person served, mostly in cash but also in kind, in the form of such items as vaccines and medicines. Payments are released quarterly, once performance has been checked and verified.

Performance is measured by a series of indicators, including coverage of immunization and prenatal care, distribution of iron sulfate tablets to pregnant women and children, and frequency of home visits by the NGO out-reach staff. Private firms have been hired to develop the monitoring system, which also looks at the accounting practices of the NGOs.

The contracting system under the PESCB appears to have produced important gains in health service delivery. Immunization rates in Guatemala rose from 69 percent to 87 percent between 1997 and 2001. Household surveys now under way will be able to assess the impact of the program on mother and child health outcomes.

During the early years of PESCB, a number of obstacles had to be overcome. Government health workers resisted the scheme because they feared that contracting with NGOs was a hidden form of privatization of the government health services. The NGOs were initially reluctant to get involved, too, because they felt that the government was demanding too much in the way...