Financial Incentives

Provider payment methods are important to consider any time a government or a payor wants to improve the efficiency and the quality of health services with the use of its funds. Changes in provider payment methods are often pivotal to broader health reform measures to contain costs and use existing resources effectively, and also to improve quality of care and equitable financial access to care. [author’s description]

The original purpose of the ADHA scheme was to compensate doctors for hours worked beyond the standard 40 hours per week or 160 hours per month. This study investigated how the scheme impacted a number of human resources (HR) factors associated with health worker recruitment, deployment, retention and performance - specifically, how the significantly higher income levels resulting from the ADHA scheme influenced job satisfaction, motivation, workplace climate and the relationship between clinical and administrative staff, as well as productivity. The study provides a detailed chronology of the ADHA scheme and explores lessons learned from the way in which the GOG implemented and administered the scheme.

This presentation was given at the First Forum on Human Resources for Health in Kampala. It reviews a study of how Rwanda, faced with constrained fiscal conditions, has implemented innovative reforms to create fiscal space for human resources and to make these resources more responsive to needs through an analysis of budget documents and policy and regulation changes and key informant interviews. [adapted from author]

This paper, which was prepared as background for the Working Group on Performance Based Incentives, looks at a particular type of financing intervention that has been applied in several different ways around the world to address the joint problems of underutilization and low quality of health services. The focus is on demand- and supply-side financial and material (examples: food, travel vouchers) incentives that can be used to improve utilization and quality of ambulatory health care services, especially for the poor. [from introduction]

This paper looks at the successes and failures of today’s health care workforce. Hargadon and Plsek argue that our current solutions to the problems in the health workforce are insufficient. To overcome these insufficiencies, they believe that we need to better understand the complexities of the workforce. However, this is not an easy feat, because these problems challenge our traditional mental models of how things should work. [abstract]

This presentation was given as part of the Christian Health Association’s Conference: CHAs at a Crossroad Towards Achieving Health Millennium Development Goals. It discusses the human resources for health situation in Tanzania in general, and specific findings from the Lake zone in terms of health workers in church health institutions. The author proposes options for a motivation package to address the issues of retention for these workers.

This paper examines the policy options for the regulation of dual job holding by medical professionals in highly resource-constrained settings. It draws on the limited evidence available on this topic to assess a number of regulatory options in relation to the objectives of quality of care and access to services, as well as some of the policy constraints that can undermine implementation in resource-poor settings. [from abstract]

To explore the extent, characteristics, incentives, effects and possible regulation of private medical practice in public facilities this study undertook a cross sectional quantitative – qualitative analysis. Results from the survey and focus groups reveal that DP is mainly a strategy to obtain better incomes in the face of low public salaries. Furthermore this situation is influenced by the Peruvian macroeconomic environment characterised by an oversupply of doctors caused by the deregulation medical practice and education. DP is common in all types of health facilities and working institutions, and it is closely associated to clinical practices.

With the recognition that public hospitals are often productively inefficient, reforms have taken place worldwide to increase their administrative autonomy and financial responsibility. Reforms in China have been some of the most radical: the government budget for public hospitals was fixed, and hospitals had to rely on charges to fill their financing gap. Accompanying these changes was the widespread introduction of performance-related pay for hospital doctors, termed the “bonus” system. While the policy objective was to improve productivity and cost recovery, it is likely that the incentive to increase the quantity of care provided would operate regardless of whether the care was medically necessary.

A preliminary report of a small-scale study of health worker motivation in South Africa exploring the links between motivation and performance, and the relevance of workplace trust as an influence over motivation. In general, health workers appear to give less emphasis to trust in colleagues as an influence over motivation, and much great emphasis to trust in manager/supervisor and trust in employing organization. The initial findings suggest that: health care provision is affected by health worker motivation and performance problems; there is potential to strengthen motivation and performance through changed management practices; the way in which management decisions are implemented is a critical influence over the impact of any decision on motivation; and management action needs to recognize the perceived risk and powerlessness expressed by many health workers, and seek to tackle these perceptions.

A study exploring the influence of workplace trust over health worker performance at primary care level was undertaken in Tanzania and South Africa in 2003. The main factors identified by respondents as underlying poor health worker performance and motivation in the public sector were: staff shortages and low salaries; poor working conditions; favoritism and lack of transparency in human resource management practices; limited supervision and monitoring; weak disciplinary procedures; limited and slow opportunities for promotion; differential salary levels; rigid employment management policies; slow decision-making across the public service; and conflicting lines of accountability at district level.

This presentation was given at the First Forum on Human Resources for Health in Kampala. It describes a study done to analyze health worker perceptions of renumeration and determine the factors that affect the mobility of the health workforce in Burkina Faso

This study reviews the healthcare literature that examines the effect of financial incentives on the behaviour of healthcare organisations and individuals with respect to the quality of care they deliver to consumers. Its purpose is to provide guidance to policy-makers in government and decision-makers in the private sector in their efforts to improve quality of care through payment reforms. [adapted from summary]

Developing countries that have to cope with pressures to reform their bureaucracies have to contend with increasing health worker benefits and salaries that are often intended to retain these health workers in government service. In the Philippines, national and local efforts in health have been forced to focus on guaranteeing some of these benefits, and local governments are feeling the financial limitations of their local funds. [from abstract]

Health worker motivation has the potential to have a large impact on health systems performance, yet little is known about the key determinants and outcomes of motivation in developing and transition countries. This study, conducted in Jordan and Georgia focused on the individual determinants and outcomes of the worker’s motivational process. A wide range of psychometric scales was used to assess individual differences, perceived contextual factors and motivational outcomes (feelings, thoughts and behaviors). Although the two countries have very different cultural and socio-economic environments, many similarities existed among key determinants between the two countries.

This report is aimed at policy makers both in developing country governments and in international agencies. It was a key input to the second meeting of the High Level Forum on the Health Millennium Development Goals held in Abuja in December 2004. It was written to raise awareness of a looming crisis in human resources for health confronting most countries in sub-Saharan Africa, and to help serve as a catalyst for action to avert this crisis. It is hoped that it goes beyond illustrating the potential gravity of the impending crisis in human resources for health, to demonstrating that concrete actions can and in many cases are being taken to address the problem.

To provide good quality health care services, it is important to develop strategies influencing staff motivation for better performance. An exploratory qualitative research was carried out among health workers in two provinces in North Viet Nam so as to identify entry points for developing strategies that improve staff performance in rural areas. [from abstract]

In recent years, a number of specific strategies for improving health services and strengthening health systems have been consistently advocated. In order to advise governments, WHO commissioned this exploratory study to examine more closely the track record of these strategies in twelve low-income countries. [author’s description]

This video clip is 9 minutes and 43 seconds and describes the community based medical education program for physican education in Malawi. The curiculum requires that doctors must be trained in the communities in which they will work to prevent brain drain. It also discusses the incentives Malawi uses to retain doctors in the rural areas.

The aim of the project was to evaluate the effect of the new rural allowance on the short-term career choices of health professionals in rural areas. A longitudinal cohort study design was used, before and after the introduction of the new allowance. The objectives of the study were therefore: To measure the extent to which rural health professionals reported that they are influenced to continue in their posts by the previous rural allowance and other factors; to measure the same perceptions after the introduction of the new rural allowance; to analyze the differences in responses; and to make recommendations based on the findings.

This paper provides an overview of evidence of the effects of incentives on the performance and motivation of independent health professionals and health workers.

The Ministry of Public Health has implemented increasingly complex payment schemes to cope with the internal brain drain situation among certain categories of health personnel. Non-private-practice allowances have been given to medical doctors, dentists and pharmacists since 1993 and a fee-for-service scheme for extra office hour practices started since 1994. This research is to evaluate the impact of the fee-for-service payment on productivity and quality of care and to consider any resultant moral hazards amongs health providers. [from abstract]

Incentives such as P4P can be very powerful in their effects. Caution in their design and deployment is essential. However, ignoring their potential would be unwise, as they offer the possibility of improving value for money for taxpayers and patients. The first section of the paper will review evidence of common provider problems in all health care systems and their implications for introducing a P4P system. This will be followed by a review of P4P reforms in the United Kingdom and United States in particular. [from author]

This paper presents a case study of an intervention (the lunch allowance scheme) instituted in Uganda to improve retention and motivation of health workers. The study traces the scheme’s evolution, assesses its impact on the brain drain of health professionals (medical doctors and nurses), and identifies difficulties encountered and lessons learned. [abstract]

The NGO Service Delivery Program (NSDP) developed a system ensuring better access of the health services to the poorest segment of the population, along with raising revenue by providing fee-for services to the better off population. The former strategy highlights a safety net policy for the poorest segment, who are identified by participatory rapid appraisal technique and handed out a health benefit card. The latter strategy helps the NGOs to revise their service charges according to local demand and other factors. This report analyzes this pilot effort and its drawbacks and makes recommendations based on lessons learned. [adapted from author]

This paper explores the impact of alternative methods of provider payment mechanisms in developing countries. The paper sees provider payment as a form of contract between purchaser and provider and draws upon the economic literature on agency contracts to consider the problem of how best to develop appropriate payment mechanisms. In addition, the paper suggests the need to study the effects of payment mechanisms on the organization of the health care system, not only in terms of market structure, but also in the way providers are organized internally. The main payment methods and the incentives inherent in them are discussed. [abstract]

In this paper, we focus on those policy instruments with monetary incentives that are used to contain public health expenditure in high-income countries.

This report reviews the current status of provider payment reform in selected Asian and atin American countries, as well as possible research questions and research approaches. Provider payment method, the mechanism for transfering financial resources from the payers of health services (the government, insurers, and/or patients) to the providers, influences providers’ behavior (in terms of the types, amounts, and quality of services they offer) and financial performance. The research found that reforms in Asia are largely national level reforms affecting the whole of the social security system, reforms in Latin America tend to be less centrally driven and uniform.

This resolution, enacted by the Department of Health in South Africa, details the management and conditions of an allowance designed to attract and retain health workers in rural areas.

This video clip is 8 minutes and 45 seconds and discusses Uganda’s pay reforms and other incentive for health personnel to address the brain drain issue. It also has information on other incentives and programs such as government sponsored grants to health institutions to promote research and the retention of health educators.


You must have access to a media player to see the video. Download instructions are available from the WHO Best Practices in Human Resources for Health Development website.