Cost-effectiveness of implementing performance-based financing for improving maternal and child health in Ethiopia

by Mideksa Adugna Koricho, Girmaye Deye Dinsa, Nelisiwe Khuzwayo

Introduction

Performance Based Financing (PBF) supports realization of universal health coverage by promoting bargaining between purchasers and health service providers through identifying priority services and monitoring indicators. In PBF, purchasers use health statistics and information to make decisions rather than merely reimbursing invoices. In this respect, PBF shares certain elements of strategic health purchasing. PBF implementation began in Ethiopia in 2015 as a pilot at one hospital and eight health centers. Prior to this the system predominantly followed input-based financing where providers were provided with a predetermined budget for inputs for service provision. The purpose of the study is to determine whether the implementation of PBF is cost-effective in improving maternal and child health in Ethiopia compared to the standard care.

Methods

The current study used cost-effectiveness analysis to assess the effects of PBF on maternal and child health. Two districts implementing PBF and two following standard care were selected for the study. Both groups of selected districts share common grounds before initiating PBF in the selected group. The provider perspective costing approach was used in the study. Data at the district level were gathered retrospectively for the period of July 2018 to June 2021. Data from health service statistics were transformed to population level coverages and the Lives Saved Tool method used to compute the number of lives saved. Additionally for purpose of comparison, lives saved were translated into discounted quality-adjusted life years.

Results

The number of lives saved under PBF was 261, whereas number of lives saved under standard care was 194. The identified incremental cost per capita due to PBF was $1.8 while total costs of delivering service at PBF district was 8,816,370 USD per million population per year while the standard care costs 9,780,920 USD per million population per year. QALYs obtained under PBF and standard care were 6,118 and 4,526 per million population per year, respectively.

Conclusions

The conclusion made from this analysis is that, implementing PBF is cost-saving in Ethiopia compared to the standard care.

Limitations of the study