Reviewed by Isidore Sieleunou
In reply to the paper titled « Performance-based financing: just a donor fad or a catalyst towards comprehensive health-care reform? », published last March in the WHO Bulletin by Meessen et al., Andreas Kalk offers three mains arguments against performance based-financing (PBF): (1) performance incentives may diminish the idealism of health personnel, this is the so-called “crowding out effect”, well-known in the incentive literature, (2) PBF focuses only on certain health activities and can often lead to “gaming”, (3) probably the main Kalk’s argument, is the high transaction costs (overheads), that can reach 50% in areas with difficult geographical access such as eastern parts of the Democratic Republic of the Congo, according to the author who quotes a personal communication.
Kalk’s paper triggered a lot of discussions in the PBF community of practice (http://groups.google.com/group/performance-based-financing). This high cost of transaction mentioned by Kalk surprised many PBF experts. Based on several studies, including the Rwandan case recently presented at the last CERDI international conference on health financing in Clermont-Ferrand, it appears that the figure of the overhead cost would more correctly be between 14.5% – 29%. In addition, one should note that, when one talks about % of the transaction costs, we need to look at both sides of the ratio. If the amount of money transferred increases, the percentage will decrease (as PBF transaction costs are fixed costs).
PBF is a controversial strategy challenging some long-established practices in the health sector. The debate is certainly not over.