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Related Experiment Video

Updated: Oct 11, 2025

Use of a Percutaneous Ventricular Assist Device/Left Atrium to Femoral Artery Bypass System for Cardiogenic Shock

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Performance-based Financing versus "Unconditional" Direct Facility Financing - False Dichotomy?

Sophie Witter¹, Maria Paola Bertone¹, Karin Diaconu¹

¹Institute of Global Health and Development & ReBUILD for Resilience, Queen Margaret University, Edinburgh, UK.

Health Systems and Reform

|December 7, 2021

Summary

Performance-based financing and direct facility financing are debated approaches for essential health care in low-income countries. Both can strengthen health systems when contextually appropriate and viewed as complementary strategies.

Keywords:

Performance-based financing direct facility financing health financing reforms health system strengthening low- and middle-income countries

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Area of Science:

Health economics
Public health policy
Health system strengthening

Background:

Persistent challenges in financing primary health care in low- and middle-income countries.
Decades-long debate on optimal health care financing mechanisms.
Public health systems frequently struggle with reliable and adequate funding.

Purpose of the Study:

To examine the evidence for performance-based financing (PBF) and direct facility financing (DFF).
To compare the effectiveness and requirements of PBF and DFF.
To discuss the complementary roles of PBF and DFF in health system strengthening.

Main Methods:

Commentary and evidence synthesis.
Review of literature on health care financing modalities.
Analysis of shared features and contextual requirements for effectiveness.

Main Results:

Both PBF and DFF have been implemented to address health financing gaps.
Concerns regarding PBF include high transaction costs, mixed results, and sustainability.
DFF has gained favor as a less conditional financing approach.
Both modalities share common requirements for successful implementation and effectiveness.

Conclusions:

Performance-based financing and direct facility financing are not mutually exclusive.
Both approaches can contribute to health system strengthening when implemented in the right context.
PBF and DFF should be considered potentially complementary rather than rival financing strategies.