Optimizing Payment Formulas for Results-Based Financing: Evidence from a Lab-in-the-Field Experiment in Nigeria

Performance-based financing (PBF) programs for health in low and middle-income countries often offer financial incentives to health care providers or workers to increase the quantity of a selected set of health care services and/or quality measures. PBF programs can induce behavioral responses in several ways, e.g., by communicating what services are considered a “priority” and/or by the financial incentives attached to the included measures. We conducted an incentivized experiment in Nigeria that examined health workers’ response to the information and the financial incentives (rewards or penalties) implicit in PBF programs. Health workers were asked to read several partograph cases and to determine the correct actions to be taken based on this information. Within a clinic, we randomized workers into three study arms: (a) information-only; (b) information with rewards for specific activities; and (c) information with penalties for not doing specific activities. We compare health worker performance in each of these three study arms to distinguish the potential behavioral responses to PBF, and discuss how these findings can be used to design more effective provider payment mechanisms.