Cost analysis of the performance based financing scheme in Rwanda (2006 – 2009)

Abstract

Background Performance-Based Financing (PBF) has become a key strategy to strengthen overall health systems by linking payment to providers to their performance. Rwanda has been the first Low- Income Country to scale up PBF approaches from pilot projects. The scaling up of PBF in Rwanda has shown significant results through a well-executed and rigorous impact evaluation, a first such endeavor. While other countries are initiating PBF and others are planning the scaling up of PBF, questions remains on the real total costs and the proportion of the transaction cost (investment and operating cost) of the strategy. Methods The present study aimed at collecting all costs information for both the payment of the indicators selected by the Ministry of Health and all administrative costs of PBF implementation, Indicators payment covered the cost of general health and HIV indicators as well as the payment to district hospitals. The main categories collected as administrative cost of PBF covered Evaluation, data verification, capacity building and coordination. Information was gathered from the Rwanda government institutions and all development partners involved in the PBF scaling up process from January 2006 to December 2009. Data management and analysis were done with both Stata software version 11 (StataCorp, 2009) and MS Excel spreadsheets and pivot tables. Results The total per capita cost of indicators payment kept increasing over the four years. It was US$0,35 in 2006; US$0,65 in 2007; US$0,88 in 2008 and US$1,36 in 2009. The transaction costs of scaling-up PBF (investment and operating costs) are estimated at 23% of the total expenditure for PBF over the study period. Annual per capita transaction cost increased from 2006 to 2008 (US$0,14; US$0,23 and US$0,34 respectively), and started decreasing in 2009 at US$0,28. This was due to a significant decrease of investment costs, especially those related to international technical assistance (TA) which decreased dramatically in 2009 in replacement by national TA. This documents an important capacity transfer from international to local TA as the system Cost Analysis of PBF in Rwanda Page 10 matures. Also, important economies of scale have been documented, with the Cost-Transfer Ratio (CTR) which came from US$0.40 in 2006 to US$0.21 in 2009. The total CTR has been of US$0,30. This means that, over the four years, it cost US$0.30 to put US$1 in a health facility bank account. Conclusion and recommendation PBF is a feasible and cost effective strategy. The launching of the scheme needs external expertise and funding to support the government. In Rwanda, there are significant capacity buildings and capacity transfer which evidence is a decreasing percentage of international technical assistance as it is being replaced by national technical assistance. The government should consider increasing the budget allocated to PBF to ensure sustainability.