Performance-based Incentives for Health: Demand- and Supply-Side Incentives in the Nicaraguan Red de Protección Social - Working Paper 119

Ferdinando Regalía
Leslie Castro
April 23, 2007

Nicaragua's Red de Protección Social (RPS) was one of the first conditional cash transfer (CCT) programs implemented in a low-income country. In the program, cash is transferred to poor households on the condition that their children attend school and visit preventive healthcare providers. Supply-side incentives are also given to healthcare providers, who are paid on the basis of their performance against predetermined targets. Both private and nonprofit healthcare providers contracted by the government participate in the program by extending the coverage of services to previously underserved areas. A rigorous evaluation of the program shows that their combination can work to significantly increase the use of health services among the poor. The evaluation was not, however, able to identify which of the impacts could be attributed to the supply- and demand-side components of the program. Future research efforts should be devoted to "unbundling the bundle" and assessing the relative contribution of supply vs. demand incentives to achieving improved health outcomes. This paper is one in a series of four CGD working papers written in conjunction with the Performance-Based Incentives Working Group (Working Paper Nos. 119 – 122).

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