Ideas to Action:

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Performance Incentives: Q&A with Rena Eichler and Ruth Levine

June 15, 2009

Performance Incentives for Global HealthRena Eichler and Ruth Levine, lead co-authors of the newly released book, Performance Incentives for Global Health: Potential and Pitfalls, respond to questions about the study.

Q: What are performance incentives?

Eichler: There are many ways of using rewards to improve outcomes at different levels of the health system. We studied a specific form of performance incentives, in which money or goods are given to patients or providers when they take health-related actions or achieve set targets. For example, cash or food may be given to parents for having their children immunized or attending nutrition classes, or to patients for getting tested for communicable diseases, or adhering to TB or AIDS treatment. Financial incentives also may be paid to service providers or networks of facilities for attaining targets in the quantity and quality of services provided.

These incentives usually represent a small portion of total health spending—a few percentage points—and don’t substitute for the resources required to build infrastructure, train health workers, and strengthen basic systems. As a complement to those sorts of investments, though, performance incentives can be a bit of grease in the wheels to make the health system work more smoothly.

Q: What’s new about this idea?

Levine: In some sense, it’s a very old idea. We certainly see the idea of rewarding “good” behavior from antiquity—in fact, one colleague pointed out that there was mention of incentives in the Hammurabi Code from the 18th century BC! The application in a systematic way in the health sector, though, is relatively new, and it’s an emerging trend in both high-income settings, such as the U.S. and the UK, and in developing countries. For donors who work in the health sector, it’s a promising approach to get more health out of their health care spending. We think it may be especially useful in cases where new funding has become available to address high-priority health problems.

Q: Why should people be paid more to do the right thing?

Eichler: Performance incentives can help to overcome barriers that prevent people—patients and providers—from “doing the right thing.” Demand-side incentives—those offered to parents of young children or to adult patients themselves—are a form of positive reinforcement, spurring people to make the effort to seek care, complete a course of treatment, or modify their eating or other behavior. Supply-side incentives—those offered to healthcare providers—can help to overcome problems in the existing incentive environment where, for example, people may be paid whether or not they come to work regularly, and whether or not they are responsive to the needs of the community.

I don’t think performance incentives work when they are used to get people to do things they are not intrinsically motivated to do; but I do think they can provide that extra kick to make it more likely than it otherwise would be for people to act on their positive motivations.

Q: Why did you do this project now?

Levine: NGOs, donors, and governments in low- and middle-income countries, are seeking ways to improve the way health systems function and to achieve ambitious goals for health improvement. When we look across strategies to do that, one of the most promising innovations being explored is the introduction of performance incentives.

There are compelling conceptual reasons to believe that part of the underuse of health services, shortcomings in adherence to drug regimens, poor quality of services, and other problems are due to a dysfunctional environment, as well as there being too few resources in absolute terms. Paying for performance can help to align the behavior of patients and health workers to achieve better health outcomes. There are also some important real-world experiences that demonstrate both the potential to see dramatic improvements when incentives are introduced, as well as some of the ways in which problems can occur.

We thought the time was right to take a close look and lay out in clear and specific language the why, what, and how of performance incentives, as a contribution to the sometimes very vague discussions of “health system strengthening.”

Q: Performance incentives are about tinkering with people’s behaviors. Can they ever go wrong?

Eichler: Incentives can be very powerful, so it’s very important to design and implement them in ways that can help to avoid unintended consequences. The problems to be most concerned about are misreporting, undermining the intrinsic motivations of health workers, and inducing health workers to neglect services that are not being rewarded. When funded by donors, there are also the standard issues with any donor-supported health program, such as consistency with the overall direction of health policies and priorities, and sustainable funding.

Q: What do you hope will come out of this work?

Levine: No one thinks the answer to every problem in every country will be to use performance incentives. Our modest hope for this book, though, is that as developing-country governments, NGOs, and donor partners make choices about investing in health systems or in disease-specific programs, they will first analyze the existing incentive environment to look at supply- and demand-side barriers and, second, consider whether there is a place for performance incentives. If the choice is made to go ahead with an incentive program, then the experiences documented in this book and the lessons about design and implementation can help to get things started successfully.