Are Incentives Everything? Payment Mechanisms for Health Care Providers in Developing Countries

Abstract

This paper assesses the extent to which
 provider payment mechanisms can help developing countries
 address their leading health care problems. It first
 identifies four key problems in the health care systems in
 developing countries: 1) public facilities, which provide
 the bulk of secondary and tertiary health care services in
 most countries, offer services of poor quality; 2) providers
 cannot be enticed to rural and urban marginal areas, leaving
 large segments of the population without adequate access to
 health care; 3) the composition of health services offered
 and consumed is sub-optimal; and 4) coordination in the
 delivery of care, including referrals, second opinions, and
 teamwork, is inadequate. The paper examines each problem in
 turn and assesses the extent to which changes in provider
 payments might address it.