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Phase 2

Review of PBF mechanisms

Like every realist evaluation and synthesis, the ResQ approach starts with the creation of an initial program theory. This theory helps us to focus our research and attention on those issues, conditions, mechanisms, hypotheses that will most likely matter (Pawson, 2013). The creation of the theory starts by identifying the mechanisms that are hypothesized and theorized to be triggered by the intervention. The main sources for this are analytical, conceptual and theoretical frameworks of the intervention or related interventions, research protocols, policy documents and key informant interviews.


In this first step I purposefully select and analyse 6 different documents which I know have a relatively extensive discussion of the PBF program theory. Three are protocols based on a theory of change of PBF (Borghi et al., 2018; Nimpagaritse et al., 2016; Ridde et al., 2014), one is a theoretical and conceptual discussion of the effect of PBF on motivation (Lohmann et al., 2016), one is the comprehensive PBF toolkit published by the World Bank (Fritsche et al., 2014) and the sixth document is a conceptual framework developed by the Health Results Innovation Trust Fund of the World Bank (HRITF, 2015). On top of these documents, I also used my own knowledge from research on PBF to make sense of the theories and the underlying mechanisms.

This approach is far from systematic, however, the idea is not to have an exhaustive analysis of the literature and discover every possible mechanism. This is the initial phase of the study and new mechanisms may become relevant during the analysis of the empirical literature in later steps. If a new mechanism is found, we can go back to step 1 and integrate the new mechanism in the analysis.

Evidently, these sources do not describe the program theory in a realist way. They use theory of change or logic models and describe processes and non-realist mechanisms. We therefore need to be flexible in our thinking and apply abductive reasoning in order to unearth the underlying mechanism from the theories and theoretical frameworks. “[A]bduction is the inventive thinking required to imagine the existence of such mechanisms” (Jagosh, 2020, p. 122). So based on the information given in the selected documents, my own knowledge of PBF and the mechanisms identified in the theoretical mechanism database and the annotated CMOC database I have identified 17 mechanisms at different operational levels. This set of mechanisms seems to be comprehensive enough to continue to the next steps of the study.


Extrinsic motivation

A person will do a specific task because the person would like to have the material reward (or avoid a sanction) attached to (not) doing that task.

One of the most straightforward mechanisms that may get triggered by PBF is of course extrinsic motivation. It is so evident that it is sometimes even seen as one of the only mechanisms triggered by PBF, especially when a strong emphasis is put on the financial incentives and the marketization aspect of PBF (SINA Health, 2019). Financial incentives that are at the core of PBF can “make health workers more motivated to adhere to the incentivized dimensions of the service […] and to adopt strategies to attract patients to facilities for incentivised services (for quantity targets) to maximise incentive payments” (Borghi et al., 2018, p. 3; Fritsche et al., 2014; Lohmann et al., 2016). Not only health workers can be more motivated because of the incentives, health managers may also become more involved (Borghi et al., 2018; Fritsche et al., 2014).

PBF also increases the transparency by monitoring and publishing performance information and shortens the communication lines between the health workers and the community and patients by including the latter in the facility management committees (Fritsche et al., 2014). By doing this the threat to get sanctioned by the community due to bad results may also stimulate the extrinsic motivation mechanism.

Extrinsic motivation may improve health care quality but it may also have negative effects and may lead to undesirable behaviour like ‘cherry picking’ (patients and/or actions that are easy and less time consuming but leading to the same reward are prioritised), task-trade off (patients and/or actions that are financially rewarder are prioritised (Holmström & Milgrom, 1991)), gaming (‘actions that increase pay-outs from the incentive contract without improving actual performance’ (Baker, 1992), manipulation of information (adapting the reports wrongly in order to increase the rewards (see Campbell, 1979)) or free riding (when a team member is trying to take advantage of a team effort without contributing to it (Laffont & Martimort, 2002))   (Ireland et al., 2011; Kalk, 2011; Lohmann et al., 2016; Renmans et al., 2016).

Intrinsic motivation


A person will do a specific task because the person likes doing this task. This kind of motivation is linked to more qualitative performance of the liked tasks and is more sustainable.


As  Lohmann et al. (2016) argue, PBF may not only influence extrinsic motivation, but may also affect intrinsic motivation. The definition of PBF presented in the introduction and in an earlier paper (Renmans et al., 2017) shows that PBF is more than just financial incentives and many of its ancillary components may actually have a positive influence on intrinsic motivation  (Lohmann et al., 2016). For example, increased performance feedback may stimulate the feeling of competence (or self-efficacy), enhanced local decisional autonomy over working conditions may increase the feeling of autonomy and health workers may feel more respected because of the increased pay, all three have a positive effect on intrinsic motivation according to the self-determination theory  (Deci & Ryan, 2000; Lohmann et al., 2016). Nimpagaritse et al. (2016) add that increased supervision may also strengthen the motivation. Finally,  Ridde et al. (2014) highlight that the financial incentives may increase satisfaction of the health workers and also the intrinsic motivation.


Internalization lowers the extrinsic motivation for a specific task and replaces this with intrinsic motivation.

The kind of motivation of health workers to perform certain tasks is not static. It can change over the course of time through the mechanism called internalization. A task that is performed because of an external reward and hence extrinsic motivation, can give satisfaction, a feeling of competency, a feeling of autonomy and eventually lead to the task being performed because of the intrinsic joy it gives to the person, hence intrinsic motivation (Lohmann et al., 2016). This is relevant because as we saw, different outcomes are related to tasks performed with intrinsic motivation and those performed with extrinsic motivation.



Crowding-out lowers the intrinsic motivation for a specific task and replaces this with intrinsic motivation

The motivation can also move in the opposite direction from intrinsic to extrinsic motivation which is called crowding-out (Frey & Jegen, 2001). This is an oft-heard critique of financial incentives (Ireland et al., 2011; Sandel, 2012). Giving financial incentives to a person who is intrinsically motivated will decrease the intrinsic motivation leading to less sustainable and quality outcomes. The underlying idea is that the financial incentives shift the perceived locus of control to external rewards (Lohmann et al., 2016).


“Acquiring knowledge and skills and having them readily available from memory so you can make sense of future problems and opportunities.”  (Brown et al., 2014, p. 2)

Many definitions of learning exist, but we belief that the aforementioned definition by Brown et al. (2014) is sufficient for our purpose here. There are several ways in which PBF may trigger the learning mechanism among both health workers and health facility management: through the contract and the indicators/checklist used (Fritsche et al., 2014; Nimpagaritse et al., 2016), through extra trainings (Borghi et al., 2018; HRITF, 2015; Nimpagaritse et al., 2016; Ridde et al., 2014), through increased supervision (Borghi et al., 2018; Fritsche et al., 2014; Nimpagaritse et al., 2016), through performance feedback (Fritsche et al., 2014), the use of managerial tools to give better feedback and use data more effectively (Fritsche et al., 2014; HRITF, 2015).  Hence, the new knowledge and skills concern the situation of the health facility and the covered community, the latest guidelines and good practices in quality of care.

Belief updating

People change their beliefs and perceptions about the world based on newly received information.

Learning assumes new knowledge, hence that the health workers did not know about these good practices beforehand. However, these guidelines are of course part of the education every health worker receives, so it does not always concern new knowledge. Instead, the PBF incentives, checklist and contract will transfer information about the priorities of the ministry of health (Fritsche et al., 2014; HRITF, 2015; Nimpagaritse et al., 2016) and this may change the way the health workers perceive what is important. This is related to the mechanism of belief updating. The new information is provided by the financial incentives and the PBF contract. The information on the guidelines is not necessarily new but the importance attached to specific guidelines is. And this changes the belief of the health workers about where their priorities should lie. On the downside, highlighting what is important also entails downplaying other tasks which may get neglected (Nimpagaritse et al., 2016).

But also at the level of the patients we can see the mechanism at work. Cleaner and better equipped health facilities may change their beliefs about a malfunctioning health facility and may convince them to visit the health facility when sick (Borghi et al., 2018).

As defined here, the difference between learning and belief updating is that learning focuses on knowledge and skills whereas belief updating is more concerned with preferences, value claims, perceptions, etc. Belief updating concerns the perception of the world around us. The difference is minor, but has an important difference.


“People’s beliefs in their capabilities to produce desired effects by their actions” (Bandura 1997, P. VII) leads them to perform these tasks more motivated and with more perseverance.

Self-efficacy, as proposed by Bandura (1997), is an important mechanism that may lead to better performance and higher motivation levels. The way PBF affects the self-efficacy of the health workers is mainly through increased availability of drugs and equipment (Borghi et al., 2018) and through the participation of these health workers in the management of the facility (Lohmann et al., 2016). Moreover, positive feedback on the performance indicators may also increase the perceived self-efficacy of the health workers.


The feeling of relatedness concerns “the desire to feel connected to others—to love and care, and to be loved and cared for” (Deci & Ryan, 2000, p. 231). If this psychological need is fulfilled the health workers become more intrinsically motivated.

According to some theories (e.g. self-determination theory) the satisfaction of this psychological need may lead to increased intrinsic motivation if at the same time the feeling of autonomy and self-efficacy are also fulfilled (Deci & Ryan, 2000). PBF affects this mechanism through its increased and strengthened supervision (Borghi et al., 2018; Nimpagaritse et al., 2016), increased voice of health workers in the management of the facility (Lohmann et al., 2016).


“The organismic desire to self-organize experience and behavior and to have activity be concordant with one’s integrated sense of self.” (Deci & Ryan, 2000) This leads to higher motivation and satisfaction and better performance.

The autonomy mechanism discussed here can be found at the level of the individual. A feeling of autonomy (also closely related to ownership) has been seen as an important contributor to increased motivation and better performance (Deci & Ryan, 2000). This autonomy mechanism can be relevant for health workers and health managers. PBF may trigger this feeling of autonomy in two ways: by given more decision power to the health facility/workers and giving them access to their own bank account (Borghi et al., 2018; Lohmann et al., 2016; Nimpagaritse et al., 2016) and by generating more money to the facility which gives the management more possibilities to make actual choices (Borghi et al., 2018; Nimpagaritse et al., 2016).

Market mechanism

The use of money by buyers and sellers leads to an efficient allocation of goods and services, as well-performing firms/actors will receive more customers and more money, while less-performing actors will be pushed out of the market. It will also make underperforming managers increase their effort and reduce slack. (Hart, 1983)

To some, PBF is the translation of the ideas of New Public Management into the health care sector (SINA Health, 2019). The idea behind the New Public Management approach is that the public sector needs to be structured in a way that resembles as much as possible the private market (Lane, 2000). This means, trying to rely as much as possible on the market mechanism to assure a efficient and effective allocation of public funds (Hart, 1983). In this sense PBF is a way to mimic a market mechanism by tying payment to performance. However, this mechanism is probably more relevant when looking at contracting-out approaches, like performance-based contracting (Loevinsohn & Harding, 2005), instead of contracting-in approaches, like PBF (Renmans et al., 2017). However, even in contracting-in approaches patients might prefer to go to facilities in another catchment area because they give better services (Fritsche et al., 2014). This can be seen as a market mechanism at work. A negative consequence of this may be a widening gap between well performing and bad performing facilities.

Price effect

When the price of a good decreases, the demand for that product increases and vice versa (Berlage & Decoster, 2005).

This mechanism is very much related to the market mechanism. It is in fact the result of the combination of the later described income effect and substitution effect. The idea is simple, by reducing the price the demand for the services becomes higher, with more community members visiting the facility (Berlage & Decoster, 2005). PBF facilitates this mechanism by subsidizing user fees, encouraging the lowering of the user fees or obliging the lowering of the user fees (Fritsche et al., 2014; HRITF, 2015).

Income effect

The consumption of a specific good increases when the income of consumers or companies increases (Berlage & Decoster, 2005).

Underlying this price effect are two other effects that go in the same direction, namely the income effect and the substitution effect. In general, the income effect means that the consumption of a specific good increases when the income of people or companies increases (for example, because the price of a product goes down or the salary or income goes up) (Berlage & Decoster, 2005).

In light of a PBF intervention this mechanism may be triggered at the level of both the patients and the facility, whereas at the level of the patients the main effect will be due to the lowering of the user fees at the facility leading to an increase of the use of the health services (Fritsche et al., 2014).

At the level of the health facility the budget may increase due to the increased number of patients as a consequence of the price effect at the level of the patients and due to possible extra resources from the PBF intervention. This may lead to more possibilities to purchase important equipment and consumables or even increased salaries (Fritsche et al., 2014).

Substitution effect

The consumption of a specific good is positively related to the consumption of a good that can be seen as its substitute (Berlage & Decoster, 2005).

Another mechanism that influences the price effect is the substitution effect[1]. When two or more products are interchangeable or substitutes a change in price of one of the products may change the consumption of the other products. In this case the substitute may be public health facilities, private health facilities, and traditional health facilities. Hence, if in a public PBF facility the user fees decrease, patients may shift from private or traditional to public health facilities. This has important implications for the effect of the intervention at population level. This effect will differ when patients go from good health care at a private facility to good health care at a public facility, or from good health care at a private facility to lower quality health care at a public facility, or any other combination of substitutions.

[1] This effect has not been discussed in the documents reviewed but forms an important part of the earlier discussed price effect.

Organizational commitment

Organizational commitment is an employee’s psychological attachment to an organization that leads to better performance and less absenteeism. The literature distinguishes three kinds of organizational commitment: affective, continuance and normative (Meyer & Allen, 1991).

The three distinct forms of organizational commitment can be described as follows: “Affective commitment refers to the employee’s emotional attachment to, identification with, and involvement in the organization. […] Continuance commitment refers to an awareness of the costs associated with leaving the organization. […] Normative commitment reflects a feeling of obligation to continue employment.” (Meyer & Allen, 1991, p. 67). It seems that PBF is mostly related to the affective commitment form of organizational commitment. By linking the health workers’ salary to the performance of the health facility and giving them a voice in the facility management, they become more involved in and attached to a well-functioning facility (Fritsche et al., 2014).


The accountability mechanism means that an entity’s powers are restricted to actions that are legal and benefit the public good. According to Schedler (1999) it consists of two dimensions: “answerability, the obligation of public officials to inform about and to explain what they are doing; and enforcement, the capacity of accounting agencies to impose sanctions on powerholders who have violated their public duties” (p.14).


Accountability is most often used within the political science literature, and more specifically in relation to democracy and the exercise of power (e.g. Schedler, 1999). In the framework of PBF, power concerns the use of public money for the organization of quality health care at the facility level. Indeed, here the accountability mechanism relates to the level of the health facility and not the individual health workers, i.e. the facility as an entity is accountable for its actions and handling of public money. The mechanism thus needs to be differentiated from the peer pressure or the extrinsic motivation at the level of the health workers.

In PBF this mechanism is made possible because of the increased transparency due to the recording, monitoring and publishing of performance information (Fritsche et al., 2014; HRITF, 2015; Ridde et al., 2014), because of the increased involvement of the community in the management of the health facility which strongly shortens the communication lines (Fritsche et al., 2014), and because of the sometimes use patient feedback surveys (Fritsche et al., 2014).

Organizational culture

The organizational culture comprises the assumptions, values, traditions, norms and ‘ways things are done’ in an organization. As a mechanism it drives the behavior and selection of the employees and managers. A change in the organizational culture can lead to important changes in the performance of the organization.

The literature on organizational culture is very diverse and many different typologies exist. This diversity and abundance shows that it is central to a well-performing organization, and, hence, has causal power. One important typology has been developed by Cameron and Quinn (2011) and differentiates between the hierarchy, market, adhocracy and clan culture. Moving between these organizational cultures will have an important influence on the performance of the organization, but also on the satisfaction of the employees.

Within the framework of PBF, it has been argued that it creates and organizational culture that is “more favourable to innovation, flexibility, responsibility and entrepreneurship” (Nimpagaritse et al., 2016, p. 4). This seems to be closely related to the market culture described by Cameron and Quinn (2011).

Importantly, it has also been argued that the organizational culture can be seen as an important context condition that influences the way certain strategies are welcomed by the organization. Hence, depending on the existing organizational culture, the financial incentives may be more or less accepted by the health workers at the facilities.


Amotivation “is a state in which people lack the intention to behave, and thus lack motivation” (Deci & Ryan, 2000, p.237).

The outcome of amotivation is something that is not done, hence it is difficult to observe. However, not abiding to the rules, not following guidelines, absenteeism, etc. can all be seen as forms of amotivation. Although PBF is used in order to overcome such amotivation, it may also trigger amotivation when payments are not made on time, are perceived as unfair or other aspects of the intervention cause dissatisfaction (Fritsche et al., 2014).


Interactions between mechanisms

The mechanism framework in Figure 1 shows how the different mechanism operate at different operational levels and for different actors: patients, the health workers (including the management), the health facility and the health sector. It also shows the interactions between mechanisms: outcomes of one mechanism may contribute to another mechanism, e.g. motivation will lead to more learning, or several mechanisms may combine into one higher order mechanism, e.g. the substitution and income effect, jointly create the price effect, or mechanisms that rule each other out, e.g. crowding out and internalization. This diagram is clearly not yet a program theory, the study’s aim is to research which context conditions are relevant for which mechanisms and how they interact to generate outcomes.

Figure 1: Mechanism framework showing the interactions between mechanisms


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