Results-Based Financing

Results-based financing (RBF) is a mechanism that links financing to pre-determined results, with payment made upon verification that the results have been delivered. When well designed, RBFs can significantly improve desired development outcomes by creating accountability and incentivizing cost-effectiveness. RBF mechanisms can help crowd in more community health resources from risk-averse government, bilateral, and multilateral donors, driving progress toward universal health coverage.

In June 2018, in partnership with the Government of Uganda (GOU) and other key stakeholders, Living Goods co-designed the country’s first RBF mechanism for community health, a pilot funded by the Deerfield Foundation. Through this RBF, Living Goods is only paid for results that have been independently verified by Innovations for Poverty Action (IPA).

The experiment aims to demonstrate a scalable approach for contracting high-impact, cost-effective community health services that Uganda’s Ministry of Health (MOH), donors, and other partners can adopt in the future.

Unlike most other RBF programs that tie a portion of payments to achieving outcome and impact targets, Living Goods’ RBF ties 100 percent of funding to results. Thus, the RBF pilot acts much like an impact bond, except Living Goods, rather than an investor, bears the responsibility of raising working capital to deliver results.

By drawing attention to key health results, creating accountability in the system, and allowing community health implementers the flexibility to continue to innovate and improve, this mechanism buys down risk in community health investments for bilateral and multilateral donors. It may also facilitate local governments to more effectively finance or contract out the implementation of community health programs.

Payment metrics

For this program, payment metrics were informed by key criteria related to: impact on child mortality, alignment with GOU objectives, minimization of perverse incentives, objectivity and ease of measurement, and the ability to ensure manageable control.

The metrics are:

  1. Number of visits CHWs make to pregnant women.
  2. Number of antenatal clinic visits completed by pregnant women in facilities following CHW visits.
  3. Number of women delivering at health facilities following CHW visits.
  4. Number of postnatal visits by a CHW within 48 hours of birth.
  5. Number of postnatal visits by a CHW between 48 hours and one week after birth.
  6. Number of immunization and nutrition assessments for children under one.
  7. Number of assessments for malaria, pneumonia, and diarrhea for children under five.
  8. Number of follow-up visits by CHWs in person or via phone after referral to a health facility.

 

“Uganda’s Ministry of Health is implementing the Health Facility RBF. We look forward to the learnings from Living Goods’ community-based RBF and specifically how it links with and complements the health facility RBF.”

Dr. Sarah Byakika, Commissioner Planning, Ministry of Health

Scope and structure of the program

The Deerfield Foundation committed $400,000 in funding to Living Goods for results achieved in delivering community health services in Kyotera and Masaka districts in partnership with the GOU. Performance tracking is collected through real-time data via the Smart Health app, co-developed with Medic Mobile.

Guided by eight metrics, IPA selects a random sample of results every two weeks for verification through phone calls and household visits for beneficiaries who cannot be reached via phone. Approximately half the verifications are completed remotely, which helps keep verification costs low and ensures scalability. IPA also conducts a client satisfaction survey that may serve as a payment metric in the future.

Every quarter, IPA adjusts the performance reports to reflect only verified results and payments are made to Living Goods based on pre-determined prices assigned to each result. This incentivizes the cost-effective delivery of results as well as accurate reporting.

Instiglio, a non-profit consulting firm, acts as a trustee for the RBF pilot and is responsible for receiving, holding in escrow, and disbursing payments hinged on implementation results as reported by IPA. An advisory committee chaired by the MOH, with participation from key donor and partner organizations, provides strategic guidance on the RBF design and implementation. A Steering Committee, composed of independent experts, provides project governance and acts as an advisor and mediator for dispute resolution.

Currently, there are no upside incentives for over-achieving targets or penalties for unverified data, and the program does not include payments for some health areas such as family planning. Living Goods is looking at adding these aspects to future iterations of the design.

Our Results-Based Finance Fact Sheet

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