Bruno Meessen
It is time to realize that institutional arrangements and the incentives they set up are key determinants of the performance of health systems in poor countries as well. Thanks to the development of health insurance and Performance Based Financing, there is growing awareness of this reality in Africa. In this blog, Bruno Meessen highlights the specific contribution of PBF.
Recently, I have posted a blog reminding us that Africa is also a field of political stakes (in French only). I shared the view that health economists working in the continent too often overlook this reality.
Very often, I am puzzled by something that seems even more striking. Reading certain authors, listening to some commentators, chatting with peer scientists – no weblinks provided for these ! ;-) – it is perfectly possible to design health policies in Africa (and in low-income countries in general, the literature being pretty homogenous) without paying attention to the incentives established by institutional arrangements and contracts underlying these policies.(1) These experts’ vision is not on the fringe: it has dominated thinking on health systems over the last few decades and remains the default mentality of many actors engaged in strengthening health systems in Africa.
Yet, the fact that “incentives matter” (especially for health care providers) keeps many experts busy everywhere else in the world. Over the last two or three decades, health systems in rich countries have experienced broad and deep reforms of their institutional arrangements, governance structures and provider payment mechanisms in particular. The dynamic is also fairly strong in middle-income countries, especially in ex-socialist countries.
A few weeks ago, I was at a meeting on provider payment mechanisms organized by the "Joint Learning Network for Universal Health Coverage". We heard fascinating presentations, among others on Kyrgyzstan and Estonia… and of course shared the analysis that provider payment mechanisms will be a key issue in countries’ progress towards universal health coverage.
A question overlooked by researchers and international agencies active in Africa
The situation is different as far as poor countries are concerned. Anyone reviewing the literature dedicated to their health systems (even the papers authored by economists) would find very few empirical and theoretical documents dealing explicitly with the question of how institutional arrangements shape the health system, how they shape incentives or even on the specific topic of provider payment mechanisms.(2) Over the last twenty years, other topics – such as financial access (as far economists are concerned) – have captured most of the attention.
One could debate the reasons explaining such low attention by researchers. De facto, they seem to discard the many lessons produced by different major contributions in economics, which, over the last few decades, have established institutional arrangements as the main determinant of efficiency in human interactions.(3)
In terms of impact on policies, this lack of attention is not neutral. The implicit recommendation to African countries is that they can proceed towards universal coverage on the basis of the existing model: a national health service characterized by the State fulfilling all the roles: owner, employer, supplier, purchaser, regulator, administrator… A system in which health facilities are public administrations receiving their resources through line item budgets, often even “in kind”. It is precisely this status quo that PBF champions are challenging.
The contribution of PBF
PBF has shortcomings. Perhaps it benefits somehow from being "trendy" and yes, there is a strong favorable wind in terms of donor resources. The model can certainly be improved, and will have to be revised, as health challenges evolve, actors adapt and unintended negative consequences increase. This is but the normal evolution of any modern health system.
PBF has at least one great merit: it has brought the issue of incentives to the center of the debate on African health systems.(4) One concrete example is the spotlight now being put on previously neglected issues, such as the need to split functions in a health system. It has also breathed new life into forgotten topics (such as decentralization and making health facilities more autonomous). More fundamentally though, it has shaken up reflections on provider payment mechanisms, witnessed in the first papers presenting PBF pilot experiences, recent works produced by members of the PBF CoP, and on a nearly daily basis in discussions on our discussion group.(5)
A fad or… Newton’s apple ?
The stake for African health systems is not whether to implement PBF or not. It is to learn to look at health systems as complex institutional arrangements that set incentives for the actors involved in those systems. It is to realize that when incentives are not aligned to health system’s goals, they can (and should) be modified.
Taking this perspective is recognizing that incentives are an undeniable part of our relationships to our fellow men, just as gravity is an unquestionable dynamic in our relationship to objects. It is said that Newton developed his theory of gravity after an apple fell on his head. Perhaps another such apple has fallen upon African health systems?
Translation: Bruno Meessen & Allison Kelley
Notes :
(1) Be careful, incentives do not necessarily mean « bonus » or « financial gain ». An incentive is a gain in terms of wellbeing which one can appropriate by adopting a certain behavior. A student in theology has an incentive to succeed his exams: by obtaining his degree, he will gain access to career opportunities and personal accomplishment in his priesthood within his Church.
(2) Of course, one way or another, the question of incentives underlies most studies on health systems challenges. We recommend these stakes be made more explicit. A few researchers active in Africa have taken up the challenge. Of particular note is Kenneth Leonard and Natasha Palmer.
(3) The list of economists active in this field is very long. If one just reviews the list of the laureates of the “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel”, with Herbert Simon, Ronald Coase, Douglass North, Georges Akerlof, Michael Spence, Joseph Stiglitz, Elinor Ostrom and Oliver Williamson, one covers the spectrum pretty well.
(4) Let’s be honest. The other dynamic that has helped to bring incentives under the spotlight is the rise of health insurance. But so far, the discussion has been mostly limited to institutional arrangements dealing with risk pooling (cf. the literature on community based health insurance), and as far provider payment mechanisms are concerned, on the pros and cons of fee for service versus capitation.
(5) The discussion 3-4 weeks ago was about how to remunerate providers providing services to malnourished children and patients with chronic illnesses. It has involved experts based in the following countries: the Netherlands, Congo, the US, Chad, Central African Republic, Belgium, Cameroon, Cambodia, and Rwanda.
It is time to realize that institutional arrangements and the incentives they set up are key determinants of the performance of health systems in poor countries as well. Thanks to the development of health insurance and Performance Based Financing, there is growing awareness of this reality in Africa. In this blog, Bruno Meessen highlights the specific contribution of PBF.
Recently, I have posted a blog reminding us that Africa is also a field of political stakes (in French only). I shared the view that health economists working in the continent too often overlook this reality.
Very often, I am puzzled by something that seems even more striking. Reading certain authors, listening to some commentators, chatting with peer scientists – no weblinks provided for these ! ;-) – it is perfectly possible to design health policies in Africa (and in low-income countries in general, the literature being pretty homogenous) without paying attention to the incentives established by institutional arrangements and contracts underlying these policies.(1) These experts’ vision is not on the fringe: it has dominated thinking on health systems over the last few decades and remains the default mentality of many actors engaged in strengthening health systems in Africa.
Yet, the fact that “incentives matter” (especially for health care providers) keeps many experts busy everywhere else in the world. Over the last two or three decades, health systems in rich countries have experienced broad and deep reforms of their institutional arrangements, governance structures and provider payment mechanisms in particular. The dynamic is also fairly strong in middle-income countries, especially in ex-socialist countries.
A few weeks ago, I was at a meeting on provider payment mechanisms organized by the "Joint Learning Network for Universal Health Coverage". We heard fascinating presentations, among others on Kyrgyzstan and Estonia… and of course shared the analysis that provider payment mechanisms will be a key issue in countries’ progress towards universal health coverage.
A question overlooked by researchers and international agencies active in Africa
The situation is different as far as poor countries are concerned. Anyone reviewing the literature dedicated to their health systems (even the papers authored by economists) would find very few empirical and theoretical documents dealing explicitly with the question of how institutional arrangements shape the health system, how they shape incentives or even on the specific topic of provider payment mechanisms.(2) Over the last twenty years, other topics – such as financial access (as far economists are concerned) – have captured most of the attention.
One could debate the reasons explaining such low attention by researchers. De facto, they seem to discard the many lessons produced by different major contributions in economics, which, over the last few decades, have established institutional arrangements as the main determinant of efficiency in human interactions.(3)
In terms of impact on policies, this lack of attention is not neutral. The implicit recommendation to African countries is that they can proceed towards universal coverage on the basis of the existing model: a national health service characterized by the State fulfilling all the roles: owner, employer, supplier, purchaser, regulator, administrator… A system in which health facilities are public administrations receiving their resources through line item budgets, often even “in kind”. It is precisely this status quo that PBF champions are challenging.
The contribution of PBF
PBF has shortcomings. Perhaps it benefits somehow from being "trendy" and yes, there is a strong favorable wind in terms of donor resources. The model can certainly be improved, and will have to be revised, as health challenges evolve, actors adapt and unintended negative consequences increase. This is but the normal evolution of any modern health system.
PBF has at least one great merit: it has brought the issue of incentives to the center of the debate on African health systems.(4) One concrete example is the spotlight now being put on previously neglected issues, such as the need to split functions in a health system. It has also breathed new life into forgotten topics (such as decentralization and making health facilities more autonomous). More fundamentally though, it has shaken up reflections on provider payment mechanisms, witnessed in the first papers presenting PBF pilot experiences, recent works produced by members of the PBF CoP, and on a nearly daily basis in discussions on our discussion group.(5)
A fad or… Newton’s apple ?
The stake for African health systems is not whether to implement PBF or not. It is to learn to look at health systems as complex institutional arrangements that set incentives for the actors involved in those systems. It is to realize that when incentives are not aligned to health system’s goals, they can (and should) be modified.
Taking this perspective is recognizing that incentives are an undeniable part of our relationships to our fellow men, just as gravity is an unquestionable dynamic in our relationship to objects. It is said that Newton developed his theory of gravity after an apple fell on his head. Perhaps another such apple has fallen upon African health systems?
Translation: Bruno Meessen & Allison Kelley
Notes :
(1) Be careful, incentives do not necessarily mean « bonus » or « financial gain ». An incentive is a gain in terms of wellbeing which one can appropriate by adopting a certain behavior. A student in theology has an incentive to succeed his exams: by obtaining his degree, he will gain access to career opportunities and personal accomplishment in his priesthood within his Church.
(2) Of course, one way or another, the question of incentives underlies most studies on health systems challenges. We recommend these stakes be made more explicit. A few researchers active in Africa have taken up the challenge. Of particular note is Kenneth Leonard and Natasha Palmer.
(3) The list of economists active in this field is very long. If one just reviews the list of the laureates of the “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel”, with Herbert Simon, Ronald Coase, Douglass North, Georges Akerlof, Michael Spence, Joseph Stiglitz, Elinor Ostrom and Oliver Williamson, one covers the spectrum pretty well.
(4) Let’s be honest. The other dynamic that has helped to bring incentives under the spotlight is the rise of health insurance. But so far, the discussion has been mostly limited to institutional arrangements dealing with risk pooling (cf. the literature on community based health insurance), and as far provider payment mechanisms are concerned, on the pros and cons of fee for service versus capitation.
(5) The discussion 3-4 weeks ago was about how to remunerate providers providing services to malnourished children and patients with chronic illnesses. It has involved experts based in the following countries: the Netherlands, Congo, the US, Chad, Central African Republic, Belgium, Cameroon, Cambodia, and Rwanda.
