This is a joint post with Amanda Glassman.
Yesterday the World Bank and the Global Fund announced a stronger partnership for health centered around an innovative aid mechanism, results-based financing (RBF). This partnership is precisely what our CGD report More Health for the Money recommended (see the chapter on designing contracts). As we’ve argued, RBF represents a paradigm shift in aid, moving away from checking receipts to measuring results. RBF creates incentives to save more lives for the same money by paying for health services after pre-agreed results have been achieved and independent verified. We congratulate the strong leadership by Jim Kim, Tim Evans, and Mark Dybul, and the staff at both agencies including Monique Vledder of the Bank for their hard work to bring this partnership to fruition.
According to yesterday’s announcement, the Bank and the Fund will work in common countries to integrate and scale-up services, enhance supply chains, and use common RBF platforms. This duo will arguably have far wider scale and uptake than the Health Systems Funding Platform, which intended to bring the Bank, the Fund, and GAVI together but has yet to achieve widespread buy-in or results. In short, this represents a serious venture for the Fund to improve health systems.
Despite this progress, there is still room to improve the incentives between the Global Fund and its recipients. Yesterday’s announcement between the Fund and the Bank mainly focused on the subnational incentives, with little mention of the funder-country recipient incentives. The Bank has a channel to improve funder-country incentives through Program for Results (P4R) financing. But the Fund, at least prior to the New Funding Model, has weak funder-country incentives for performance.
At the Interagency Working Group on RBF on October 31, 2013, the first such meeting jointly hosted by the Global Fund and the World Bank, both levels of incentives were presented and discussed. I presented my paper published in Lancet Global Health which identifies major challenges with the Fund’s current performance-based financing (PBF) system. These include performance indicators that are mainly inputs rather than outputs or outcomes, not rigorously measured and inaccurate, and only weakly linked to the money. At present the Fund still needs to ensure that part of a grant’s funds are explicitly linked to performance.
That said, improving the quality of data and indicators used for subnational incentives through RBF, particularly with rigorous and robust measurement, will also improve the indicators used in funder-country recipient incentives. Moreover, the Fund has been considering a few “pilots” to improve funder-recipient incentives through CGD’s Cash on Delivery (COD) Aid model. Countries such as Rwanda and Benin are moving forward on some variant of COD, though the Fund still lacks a systematic strategy towards piloting. Another promising development is that the Fund is drafting operational guidance for a “menu of options” for performance incentives: regional COD; COD; and of course RBF with HRITF. But it remains unseen how much voluntary uptake there will be with a menu, and whether the Fund can articulate an overall policy that improves from its current system. This would be our Christmas wish. Stay tuned.
The Center for Global Development has a history of work on performance incentives: Rena Eichler and Ruth Levine (former CGD Vice President) convened an early CGD Working Group on performance incentives from February 2006 to 2009 and published a book on the topic, along with an accompanying video featuring several cases. Influenced by several program experiences with results-based financing and early discussions in the CGD working group, the World Bank launched the Health Results Innovation Trust Fund (HRITF) in December 2007 with Norwegian and later, UK funds. The HRITF was founded in part conditional on the creation of an Interagency Working Group (IWG) on Results-Based Financing that met twice a year. The IWG was first co-chaired by Levine and Amie Batson, member of the CGD working group and then at the World Bank and later USAID Deputy Assistant Administrator) (see here and here). Amanda Glassman, CGD’s current director of global health policy and senior fellow, participated in the CGD working group, is now a member of the IWG, has blogged about the HRITF, and she led the Salud Mesoamerica 2015, a related RBF mechanism while at the IDB.
Victoria Fan is a research fellow and health economist, and Amanda Glassman is a senior fellow and director of global health policy at the Center for Global Development. You can follow Victoria Fan at @FanVictoria and Amanda Glassman at @GlassmanAmanda.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.