The PBF Handbook: Designing and Implementing Effective Performance-Based Financing Programs

PERFORMANCE-BASED FINANCING (PBF) is a powerful means of increasing the quality and quantity of health services by providing incentives to suppliers to improve performance and achieve results. In support of the Millennium Development Goals, PEPFAR, the Global Health Initiative (GHI), and other important health initiatives, PBF can increase the use and quality of health services, stabilize or decrease the costs of these services, help use limited resources effectively, and improve staff motivation and morale, a proven incentive for staff retention.
In today’s dynamic development environment¬—with government institutions and local civil society organizations providing health services, the growth of complex multi-sectoral partnerships, the decentralization of public health functions, and country ownership of health and other services¬¬¬—organizations and countries throughout the world are increasingly using PBF to help make improvements in health and development. PBF links an organization’s funding to its achievement of agreed-upon targets and may include bonuses if the organization exceeds those targets.
This PBF handbook has been designed for use by both program design officers at US Government (USG) agencies at the central and country levels as well as for PBF implementers at national and local levels. It is our hope that presenting this comprehensive overview of PBF from both the funders’ and the implementers’ perspectives will help to facilitate the design, implementation, and evaluation of PBF programs that enhance service delivery and create positive health outcomes.

AIDSTAR Two Project

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Using Performance-Based Payments to Improve Health Programs

Linking the payment of funds with the results of service activities is a powerful strategy that funding organizations can use to make the service-providing organizations accountable for achieving program goals. The new strategy offers financial incentives and holds great promise for improving performance of health services. It can be applied in both the public and the private sectors and at different levels of a national health system.

The use of performance-based payments for funding health services is a relatively new concept. Though much remains to be learned about the design and implementation of performance-based payment systems, experience shows that collaborative partnerships between payers and service-providing organizations can contribute to success. In such partnerships, the payers and service providers jointly determine the key performance areas, define performance targets, and assess performance

This issue of The Manager presents a system for funding programs that is tied to program performance to help providers improve their services and the impact of those services in the client population. This issue explains how different payment mechanisms encourage different types of organizational behavior, and why performance-based payment schemes are more likely to help achieve the desired goals than traditional payment schemes.

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