Can Performance Based Financing change the Ugandan health system?


Can Performance Based Financing change the Ugandan health system?


Dr. Elizabeth Ekirapa-Kiracho (a Senior Health Economist on the SPEED Project) made a stimulating presentation on how Performance Based Financing (PBF) works and whether it can actually provide a magic bullet cure for Uganda’s trouble-some health sector.

At a lunch seminar, one of the many organised by the SPEED project at the School of Public Health, Makerere University, her presentation reflected on how PBF influences the functioning of a health care system and the preconditions to design a PBF model that maximizes the positive benefits and minimizes the side-effects. She pointed out that Performance based financing is a sub-class of strategies under the Results-based financing umbrella. The main elements of PBF is that there is principal-agent relation where the principal agrees to pay the agent on delivery of pre-determined results. The principal could be a donor, state or NGO while the agent is a service provider (facility or individual). She pointed out that there have been several demand side and supply side RBF schemes in the country but in Uganda so far only 3 supply side schemes have been implemented namely World Bank study (2003-2006), Cordaid (2009-2016) and NuHealth (2011-2015).

The seminar attracted a record number of participants at close to 50. Dr. Ekirapa took the participants through the benefits and potential challenges with implementation of PBF.



Key messages:

Dr. Ekirapa’s presentation emphasized that PBF can have positive influences on the health system but it can also result in perverse effects. To avoid the perverse effect caused by the incentives, she underlined the following:

  1. Combine PBF with other financing methods.
  2. A hand off approach in a weak health system is not ideal and therefore strategies to strengthen institutional management capacity need to be identified.
  3. The health system should have the capacity to meet increased demand (more health workers, expansion of facilities and purchasing more supplies).
  4. Pilot PBF schemes in both PNFP and public facilities.
  5. Plan for rigorous evaluations with mechanisms for monitoring perverse effects and for taking corrective actions.


On the pre-conditions for successful implementation of PBF in Uganda, Dr.Ekirapa made the following remarks;

  • Functional health system:

The health system must be able to meet increased demand and required targets. This implies: 1) Adequate well trained health workers.2) Sufficient number of health facilities that are within reach or mechanism in place for improving access to transport. 3) Facilities with required infrastructure, including updated technology for reporting valid and reliable figures.4) Sufficient drugs and supplies and 5) Functional referral system.

  • Good Governance in health sector:

PBF requires the following good governance elements: 1) Strong political and management systems;2) Decentralized power and management;3) respect for autonomy of health facilities which compete for funding;4) Room for change and innovation to maximize efficiencies and 5) strengthening of institutional governance capacity to allow the use of financial and non-financial incentives.

  • Suitable independent fund holder for managing the program BUT having a NGO as a fund holder is difficult because of scaling up challenges.
  • Costing of services: Services need to be costed to support realistic setting of targets and mobilization of funds for purchasing.
  • Sufficient flow of funds to pay for services.


In order for PBF to be scaled up in Uganda, she commented that this would require among others, wide consultation, clear understanding of factors that affect performance so that the strategy of expecting improved performance with a PBF approach is actually feasible and can work (theory of change), considering both demand and supply side incentives, including organizational factors that influence performance in less developed settings/facilities, strengthening the institutional governance capacity and ensuring that facilities have the required infrastructure and technical capacity to provide good services. Capacity building at all levels, including the development of business plans was also emphasised as a key element of success.

The lively discussion that ensued brought out key issues to pay attention to including the fact that PBF is not a magic bullet but can make a contribution, the need to improve governance and management practices in order to improve the Uganda health system, whether PBF is actually affordable in Uganda, whether PBF is not payment of double salaries

All said, there was some level of agreement that ‘PBF itself can be the means to fix some of the governance challenges’.