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With all the money from foreign aid and international NGOs that flows into developing countries’ health-care systems, why aren’t health outcomes better for people who live there? And how can donors make sure their money is having an impact?
A new study conducted in the Democratic Republic of Congo (DRC) evaluates one possible solution: a program of strengthening governance mechanisms at health clinics by providing incentives to achieve certain outcomes, auditing the centers to make sure their data is correct, and providing feedback to the clinics’ staffs.
Although health outcomes have improved for children in low-income countries in the last three decades, babies and young children still face steep odds—steeper in sub-Saharan Africa than anywhere else in the world. Funding from NGOs and foreign governments has helped, but it hasn’t lessened the problem as much as funders would hope.
The challenges of treating patients in developing nations “is complicated by the fact that a large share of health-care services in low-income countries is provided by nonprofit health centers that often lack effective governance structures and organizational know-how and adequate training,” the researchers write. “We argue that the bundling of performance-based incentives with auditing and feedback is a potential way to overcome these obstacles.”
The study’s authors are Anicet A. Fangwa, an assistant professor of strategy and organization at McGill University’s Desautels Faculty of Management; Caroline Flammer, a professor of international and public affairs and of climate at Columbia University’s Climate School and School of International and Public Affairs; and two HEC Paris strategy and business policy researchers: Marieke Huysentruyt, an associate professor, and Bertrand V. Quélin, a full professor.
The problem that sparked their interest is that tying funding for health centers to achieving specific milestones may seem sensible but often doesn’t work in isolation. “The sole use of performance-based funding is unlikely to be effective if the nonprofit’s employees lack the necessary knowledge on how to improve the organization’s operations, and it may even backfire if the nonprofit’s employees feel overwhelmed by the performance targets,” the researchers write.
They set out to determine whether they could improve the use of performance-based incentives. “Feedback joined with incentives to act on this feedback and achieve specific health outcomes ... helps address the knowledge gap that may otherwise undermine performance-based incentives,” the researchers write. Auditing “helps ensure that the information underlying the feedback is reliable—a prerequisite for effective feedback.”
The study takes advantage of data that the World Bank collected in 2017 on 1,000 primary-care health centers in the DRC. All the health centers received funding as part of the program, and a randomized half of them were given performance incentives, auditing, and feedback. For those centers that received this treatment, the number of services provided per employee went up, and the probability of stillbirths and neonatal deaths went down.
“These findings indicate that the intervention—that is, the bundling of performance-based funding with [auditing and feedback]—helps the treated health centers improve their operating efficiency and increase the quality of their services,” the researchers write.
When interviewed about the impact of the program on their health centers’ functioning, participants told the researchers that “a key challenge was the lack of adequate training and organizational know-how. In this regard, the quarterly rounds of feedback—combined with incentives to act on this feedback and achieve specific health outcomes—were seen as essential in inducing tangible changes that would ultimately translate into higher efficiency and quality of services.”
Crucially, the researchers did not observe the same effects when the health centers received funding alone. “This question is not only important from a societal perspective but also from an implementation and policy perspective,” the researchers write. “We find that funding is not a substitute for the governance treatment; health centers that only receive funding increase their scale but do not show improvements in operating efficiency or health outcomes.” This finding points to the need for funders to get more involved in the operations of the health clinics they support.
The paper’s conclusions should carry over to other geographies, Flammer says: “Although the study is specific to the Democratic Republic of Congo, the insights and recommendations from this study are likely to be relevant for the nonprofit health sector of other low-income countries as well.”
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Find the full study: Anicet A. Fangwa, Caroline Flammer, Marieke Huysentruyt, and Bertrand V. Quélin, “The Governance of Nonprofits and Their Social Impact: Evidence from a Randomized Program in Healthcare in the Democratic Republic of Congo.” Management Science, forthcoming.
Read more stories by Chana R. Schoenberger.