Results-Based Financing in Mozambique's Central Medical Store: A Review After 1 Year

Background: Public health commodity supply chains are typically weak in low-income countries, partly because they have many disparate yet interdependent functions and components. Approaches to strengthening supply chains in such settings have often fallen short-they address technical weaknesses, but not the incentives that motivate staff to perform better.

Methods: We reviewed the first year of a results-based financing (RBF) program in Mozambique, which began in January 2013. The program aimed to improve the performance of the central medical store-Central de Medicamentos e Artigos Medicos (CMAM)-by realigning incentives. We completed in-depth interviews and focus group discussions with 33 key informants, including representatives from CMAM and donor agencies, and collected quantitative data on performance measures and use of funds.

Implementation: The RBF agreement linked CMAM performance payments to quarterly results on 5 performance indicators related to supply planning, distribution planning, and warehouse management. RBF is predicated on the theory that a combination of carrot and stick-i.e., shared financial incentives, plus increased accountability for results-will spur changes in behavior. Important design elements: (1) indicators were measured against quarterly targets, and payments were made only for indicators that met those targets; (2) targets were set based on documented performance, at levels that could be reasonably attained, yet pushed for improvement; (3) payment was shared with and dependent on all staff, encouraging teamwork and collaboration; (4) results were validated by verifiable data sources; and (5) CMAM had discretion over how to use the funds.

Findings: We found that CMAM's performance continually improved over baseline and that CMAM achieved many of its performance targets, for example, timely submission of quarterly supply and distribution planning reports. Warehouse indicators, such as inventory management and order fulfillment, proved more challenging but were nonetheless positive. By linking payments to periodic verified results, and giving CMAM discretion over how to spend the funds, the RBF agreement motivated the workforce; focused attention on results; strengthened data collection; encouraged teamwork and innovation; and ultimately strengthened the central supply chain.

Conclusion: Policy makers and program managers can use performance incentives to catalyze and leverage existing investments. To further strengthen the approach, such incentive programs can shift attention from quantity to quality indicators, improve verification processes, and aim to institutionalize the approach.