The Next (Budget) Generation: Performance-Based Financing at Bayalpata Hospital

Nyaya Health has always believed in working with the government of Nepal to achieve its goals. While individual donors have made up the bulk of Nyaya Health's financial assets, the Nepalese government has invested $35,000 per year since 2010 and recent budget negotiations have looked to increase government investment to $100,000 a year and more in the coming years. 

The idea for a new contract with the government, due to take effect mid-July, began when the Nepali Ministry of Health approached Nyaya Health to propose a pilot program for future funding of private-public partnerships in Nepal. For this year's contract, Nyaya Health's assets from the government will be dependent on the organization's performance on certain metrics. If Nyaya meets their targeted metrics, then they will receive increased funding the next cycle, but if they don't, their funding from the government will be cut by 20%. Performance based financing for NGOs has been tried in places such as Rwanda and Nicaragua, but this is the first attempt to implement performance based financing in Nepal and focus on outcome-based funding for health organizations.

Nyaya is responsible for formulating 40% of the metrics it will be judged on, and it has focused on measurable outcome-based metrics that will hopefully result in meaningful improvement in both quality and equity of healthcare delivery. For example, one of the metrics Nyaya chose to be measured on is the institutional delivery rate for pregnant women. Nyaya works with many health posts in the region which serve as birthing centers for pregnant women to come in and deliver their babies. However, the birthing centers are often so shabby that expectant mothers choose not to come in to deliver. The performance based financing metric, which funding will be partially based, requires Bayalpata Hospital and the health posts in the region to serve a certain portion of the expected deliveries in the region, and so the hope is that the birthing centers will improve their quality once their financial status is linked to their performance.

Of course, there will be challenges. Performance-based financing relies heavily on the quality of data collection, which, if self-reported, may not always be trustworthy. That’s why Nyaya has attempted to use metrics that can be independently verified, in order to demonstrate that improvement of performance has to be real, and not just an inflated figures on government reports.

The challenges are real, but so are the potential benefits. It’s about a change in mindset. Rather than saying, "we need $100,000 to improve our birthing center", performance-based financing says, "we need $100,000 to improve the rate of institutional births in our region to reduce maternal mortality, which we will accomplish by improving our birthing center". It's about paying for results, and depending on how the pilot program with Nyaya goes, it could mark a major shift in NGO funding strategies in Nepal.