Options Guide: Performance-Based Incentives to Strengthen Public Health Supply Chains – Version 1

Rena Eichler, Alex Ergo, Brian Serumaga, James Rosen, Greg Miles, Mavere Tukai

Does your supply system ensure availability of high-quality products in sufficient quantities at service delivery points throughout your country, or are there gaps in product availability? Is your system efficient and responsive, or are there delays? Are products and money wasted? In addition to paying for health commodities, all too often supply chain systems pay for inputs such as human resources, infrastructure, and IT, and not for the performance of central medical stores, subnational depots, and service delivery points. Rather than being paid based on their inputs, central medical stores and subnational warehouses might be paid for their performance on warehouse management, timely distribution of commodities, and effective planning. At the service delivery level, supply chain performance can be rewarded in addition to quality health service delivery. Performance-based incentives (PBIs) aim to motivate all the people and teams who together comprise a public supply chain to work hard and perform their function well. PBI is an innovative approach that explicitly links financial investment to results. In essence, it financially rewards supply chain actors for achieving a predetermined performance target (e.g., performance is verified through a physical count that confirms that products shown to be in the warehouse information system are on the shelves).

While the PBI concept seems relatively straightforward, the mechanics of its implementation need to be planned very carefully to elicit the desired behavior change in a given country. To facilitate this planning, the U.S. Agency for International Development (USAID) has provided support through its Health Systems 20/20 project [1] and its supply chain strengthening projects (USAID DELIVER PROJECT, Supply Chain Management Systems (SCMS), and Systems for Improved Access to Pharmaceuticals (SIAPS) to develop this PBI Options Guide. Intended for country supply chain program managers, including those representing government, nongovernment, and donor agencies, the Options Guide offers the reader a systematic framework to document and structure his/her thought process, rationale, and ultimate decisions made when designing a PBI initiative to strengthen supply chain performance. In following each recommended step of the guide (facilitated by technical support from experienced PBI implementers), the user is alerted to factors and issues that can influence the success of a PBI scheme. Upon completion of the guide, the user will have produced an initial design and action plan for introducing PBI to his/her program area/country.

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