Performance-based financing (PBF) is advocated as an effective means to improve the quality of care by changing healthcare providers’ behavior. However, there is limited evidence on its effectiveness in low- and middle-income countries and on its implementation in primary care settings. Evidence on the effect of discontinuing PBF is even more limited than that of introducing PBF schemes. We estimate the effects of discontinuing PBF in Egypt on family planning, maternal health, and child health outcomes. We use a difference-in-differences (DiD) model with fixed effects, exploiting a unique dataset of six waves of spatially constructed facility-level health outcomes. We find that discontinuing performance-based incentives to providers had a negative effect on the knowledge of contraceptive methods, iron supplementation during pregnancy, the prevalence of childhood acute respiratory infection, and, more importantly, under-five child mortality, all of which were indirectly targeted by the PBF scheme. No significant effects are reported for directly targeted outcomes. Our findings suggest that PBF can induce permanent changes in providers’ behavior, but this may come at the expense of non-contracted outcomes.
Discontinuation of performance-based financing in primary health care: impact on family planning and maternal and child health