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At what cost is performance-based financing implemented? Novel evidence from Malawi
Manuela De Allegri1, Chris Makwero2, Aleksandra Torbica3
1Heidelberg Institute of Global Health, Medical Faculty and University Hospital, Heidelberg University, INF 130.3, Heidelberg, Germany.
Implementing performance-based financing (PBF) in Malawi, through the SSDI-PBI program, cost over $3.4 million. Personnel expenses were the largest cost, highlighting PBF
Area of Science:
- Health Economics
- Public Health Policy
- Resource Allocation
Background:
- Performance-based financing (PBF) is a strategy to improve healthcare delivery.
- Introducing strategic purchasing in low-income countries requires understanding associated costs.
- The Support for Service Delivery Integration Performance-Based Incentives (SSDI-PBI) programme was piloted in Malawi.
Purpose of the Study:
- To estimate the full economic cost of implementing the SSDI-PBI programme in Malawi.
- To differentiate between design and implementation costs.
- To analyze cost components including personnel and non-personnel expenses.
Main Methods:
- Economic cost analysis.
- Retrospective cost tracing over the 2012-2015 period.
- Categorization of costs into design, implementation, and incentives.
Main Results:
- The total cost of the SSDI-PBI programme was USD 3,402,187, averaging USD 6.46 per beneficiary.
- Design costs constituted approximately one-third of total expenditure.
- Personnel costs were the dominant category, accounting for USD 1,605,178.
Conclusions:
- Implementing PBF, such as the SSDI-PBI programme, requires significant resource investment.
- Incentives formed a substantial portion of implementation costs.
- The substantial resource consumption indicates a considerable opportunity cost for the health system.
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