Decentralized facility financing versus performance-based payments in primary health care: a large-scale randomized controlled trial in Nigeria

Abstract

Background Health system financing presents a challenge in many developing countries. We assessed two reform packages, performance-based financing (PBF) and direct facility financing (DFF), against each other and business-as-usual for maternal and child healthcare (MCH) provision in Nigeria. Methods We sampled 571 facilities (269 in PBF; 302 in DFF) in 52 districts randomly assigned to PBF or DFF, and 215 facilities in 25 observable-matched control districts. PBF facilities received $2 ($1 for operating grants plus $1 for bonuses) for every $1 received by DFF facilities (operating grants alone). Both received autonomy, supervision, and enhanced community engagement, isolating the impact of additional performance-linked facility and health worker payments. Facilities and households with recent pregnancies in facility catchments were surveyed at baseline (2014) and endline (2017). Outcomes were Penta3 immunization, institutional deliveries, modern contraceptive prevalence rate (mCPR), four-plus antenatal care (ANC) visits, insecticide-treated mosquito net (ITN) use by under-fives, and directly observed quality of care (QOC). We estimated difference-in-differences with state fixed effects and clustered standard errors. Results PBF increased institutional deliveries by 10% points over DFF and 7% over business-as-usual (p<0.01). PBF and DFF were more effective than business-as-usual for Penta3 (p<0.05 and p<0.01, respectively); PBF also for mCPR (p<0.05). Twenty-one of 26 QOC indicators improved in both PBF and DFF relative to business-as-usual (p<0.05). However, except for deliveries, PBF was as or less effective than DFF: Penta3 immunization and ITN use were each 6% less than DFF (p<0.1 for both) and QOC gains were also comparable. Utilization gains come from the middle of the rural wealth distribution (p<0.05). Conclusions Our findings show that both PBF and DFF represent significant improvements over business-as-usual for service provision and quality of care. However, except for institutional delivery, PBF and DFF do not differ from each other despite PBF disbursing $2 for every dollar disbursed by DFF. These findings highlight the importance of direct facility financing and decentralization in improving PHC and suggest potential complementarities between the two approaches in strengthening MCH service delivery. Trial registration ClinicalTrials.gov NCT03890653; May 8, 2017. Retrospectively registered.

Poverty and Shared Prosperity 2022: Correcting Course

“…It finds, however, that PFP had limited impacts, especially relative to direct facility finance, which provides autonomy to frontline health facilities to allocate operating budgets without structured financial incentives. For example, providing operating funds to public health facilities in Nigeria had comparable effects to PFP on health care use, but at half the cost (Khanna et al 2021). A similar conclusion was seen in Zambia (Friedman et al 2016).…”

Is Nigeria on course to achieve universal health coverage in the context of its epidemiological and financing transition? A knowledge, capacity and policy gap analysis (a qualitative study)

“…In addition, the BHCPF operates through health insurance and direct facility financing mechanisms, which require strong financial management and accountability systems to succeed. However, there is evidence that the design and implementation of health financing schemes and direct facility financing need to be strengthened in Nigeria, especially at the subnational levels 14 15…”

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“…DFF, an emerging policy counterfactual to PBF, shares many features of PBF projects in terms of operating budget to the front lines as well as autonomy over how to disburse that budget—but does not include performance pay. 22 …”

“…DFF, an emerging policy counterfactual to PBF, shares many features of PBF projects in terms of operating budget to the front lines as well as autonomy over how to disburse that budget-but does not include performance pay. 22 Several evaluations of PBF programmes have found that a comparison group that maintains resource neutrality and includes decentralisation can lead to equivalent gains in coverage although with differential impacts on quality of care. [23][24][25] While PBF interventions provide an unconditional core budget and additional financial incentives conditional on performance, DFF interventions only provide additional unconditional financing.…”

“…This, of course, does not imply that non-pecuniary approaches might be as or more effective than pecuniary ones, but their role is outside the scope of this analysis. DFF, an emerging policy counterfactual to PBF, shares many features of PBF projects in terms of operating budget to the front lines as well as autonomy over how to disburse that budget—but does not include performance pay 22…”