Leveraging Performance-based financing for Strategic Health Purchasing

SPARC in collaboration with KEMRI Wellcome Trust conducted a systematic review of existing evidence from different Performance Based Financing (PBF) programs, examining the influence of PBF on strategic purchasing and provide decision makers with cross-cutting lessons and policy recommendations.

The review titled, “How does Performance-Based Financing Influence Strategic Purchasing in Low-to-Middle-Income Countries (LMICs)?” was based on a systematic review of 39 studies (15 review papers and 24 primary qualitative papers). 

The review finds that though PBF has the potential to strengthen strategic purchasing functions, its effect is often limited in scope and practice. Aside from a few exceptions, the review revealed that in most countries, PBF has not systematically transformed purchasing. However, the following lessons can be drawn from PBF programs that are of value to health system-wide strategic purchasing efforts:

1. Increasing awareness of strategic purchasing requires adequate and ongoing engagement with technical and political actors, particularly within the MOH. But advocacy should reach a range of local stakeholders—including frontline health managers, health workers, and community representatives—with messages that are tailored to the political and health system context.
2. Clear and streamlined institutional arrangements are needed that identify each of the purchasing functions that need to be carried out, which institutional player will carry out each function, and how.
3. Streamlined benefit packages, rather than multiple packages through different schemes, are more easily understood by beneficiaries and providers; they also create opportunity for coherent payment incentives.
4. Contracts should be streamlined, as well as clear and precise about the responsibilities of each side, the terms of payment, and the process of implementation and enforcement.
5. Payment incentives should align with service delivery objectives and be streamlined and harmonized across different payment systems, especially if multiple funding sources are paying providers differently.
6. The intensity of monitoring and verification should be balanced with what it can help accomplish in terms of improved accountability and provider performance.
7. Providers need sufficient autonomy and management capacity to internalize and respond to the incentives created by strategic purchasing policies and approaches and to meet the needs of the populations they serve.