On Tuesday, NCID hosted Elise Huillery, Assistant Professor of Economics at SciencesPo in Paris and Lab Affiliate with the Jameel Poverty Action Lab. She joined the NCID to present her recent research on the use and effects of financial incentives in the health sector in developing countries. The randomized experiment was carried out at 96 clinics in the Democratic Republic of the Congo and the results shed light on some key outcomes of performance-based financing in healthcare and in general.

Select clinics in the district of Haut-Katanga were randomly chosen to receive their normal Department of Health funding contingent on increasing the number of patients for key treatments, such as child vaccinations.

As the intervention focused on such a general outcome, “a large autonomy to health workers to find and implement the strategies that they believe would be most efficient in achieving the desired output.” Appropriate checks and measures were used to measure how performance-based funding policies affect healthcare workers’ motivation, quality of service, and possible perverse effects of collective rewards. This study was “the first randomized study with a large sample-size exploring making funding conditional in the health sector and also the perverse effects of such a policy.”

Key findings generally supported the use of this funding scheme. A 43% increase in preventative sessions, 14% increase in staff attendance, and 60% increase in outreach activities suggest that the treatment was effective in improving in key categories. Furthermore, the occurrence of adverse effects and data manipulation was low. The far majority of the facilities did not “invent” patients, despite this being an obvious avenue to maintain funding, nor did non-key treatments received less priority than those being monitored during the intervention.

The paper is one of the first to offer randomized experimental evidence of the effects of performance pay in the health sector. Huillery and her co-author intend to proceed to examine precisely which clinics were likely to respond to the challenge with effective strategies.