Performance-Based Financing (PBF) is an approach where health facilities are paid for the quantity and quality of services they provide (please see the RBF glossary). There is evidence from a randomized controlled trial in Rwanda, and some routine operational data that suggests that PBF is working. Hence, there is much discussion about what explains the success (so far) of PBF in low-and middle-income countries. It probably comes down to about eight basic ideas. It’s tough to remember all these, but maybe we can use an acronym to remember them – SMASHING.
The first S is increasing Supervision, which probably has an effect on the performance of health workers just because supervision is rarely systematic, rarely uses a quantified checklist, is not usually recorded or used for any purpose, and feedback to health workers is done infrequently.
The M is for More funds available at the health facility level. It’s a problem everywhere, and has lead in the past to such things, as the Bamako Initiative, which tried to provide funding at a local level through user fees. Generally public healthcare systems have suffered from an inability to easily and quickly get financial resources down to facility level, and this has been a huge problem.
The A stands for Autonomy. Giving people closest to the patient autonomy in how they use resources provides an opportunity to respond to local conditions much better than they could if decisions were made by officials in distant capital cities.
The second S is for Signaling. One of the advantages of PBF is to provide a signal to health workers at the facility level about what's important and what the priorities are for the government. PBF does this quite effectively by providing an obvious signal to health workers related to the tariffs and funds that they receive for carrying out specific selected services.
The H is for Health Facility. The simple effect of being watched and attention being paid at the facility level is quite novel in many health systems. This is somewhat related to supervision but may actually be a bit different in the sense that much more attention is focused on the facility level rather than the higher levels. PBF focuses much more attention on what happens where services are actually delivered.
The I is for the Incentive, the incentive effect of PBF. It's unclear to what extent the incentive effect dominates. There are various hypotheses about this. We are in the early days of understanding to what extent the incentive effect really matters. Even in places, such as Zambia or Nigeria, where incentives for individual health workers amount to somewhere between 10 and 20% of their take home salary, PBF seems to work - so it may be a function of getting people’s attention as much as the direct monetary incentive.
N is for Numbers – Paying more careful attention to monitoring and evaluation (being more serious about using the data that is generated through routine administrative data) could be one of the real contributions of PBF to strengthening health services.
The final letter G is for Governance. It's possible that having health facility committees, involving both personnel and people from the community, and which actually have the ability to influence how money is used, may be a way of encouraging accountability at local levels. We don't have very much experience with this, but it stands to reason (and the literature on community committees for health centers points out) that unless there’s control of some operating budget, these committees tend not to function very well.
So it may be important, in terms of developing frameworks for why PBF might work, to think about SMASHING and the things that it entails. In fact, it might be helpful to teams to ask whether they’re taking full advantage of all the possible explanations for the success of PBF.