Ministries of Health and development agencies in a number of post-conflict countries have adopted Performance Based Contracting (PBC). This approach, whereby government contracts Non Government Organizations (NGO) to deliver health services, was initially tested in Cambodia and was subsequently implemented in fragile settings, including Haiti and Afghanistan. Liberia has recently adopted a PBC model, similar to that of Cambodia, which contracts NGOs to manage and support Ministry of Health and Social Welfare (MOHSW) health facilities but with the additional aim of building the MOHSW capacity in the process.
PBC rewards the contracted party upon achievement or progress towards pre-agreed targets with either financial or non-financial (e.g., attending training) incentives. When performance has not improved, the contracted party may be sanctioned; for example, the contract may not be extended or a portion of the fee (i.e., payment and/or bonus as incentive) may be withheld. Intended results, such as improvements in health worker performance and subsequently health outcomes, are to be attained in PBC through the use of incentives to motivate and/or change the behavior of key actors (i.e., the NGO and/or the service provider). To bring about change it is essential that incentives be directed to the service provider and/or beneficiary level. This trickling down of incentives to providers was found to be especially important in the case of management contracting in Cambodia.
As PBC focuses on results, the identification and selection of indicators is vital. Indicators can be defined as “a set of key measures that help you define and track progress towards your objectives". Using indicators for monitoring projects or health systems development is not new; attaching a reward and/or sanction to their attainment, however, is new. Identifying performance indicators for PBC and setting targets, which will form the basis of pay, requires serious and sometimes protracted deliberations. This case study describes the rationale and the process followed in selecting indicators for the PBC of NGOs through the Rebuilding Basic Health Services (RBHS) project in Liberia. As such, the report endeavors to make a contribution to lessons learned about PBC design and implementation. The process of identifying indicators for PBC is not only a technical process but also a political one due to competing priorities of stakeholders, and time constraints.