There is a growing concern that the traditional-budget-based financing of health services does not have adequate incentive to stimulate health sector performance improvement in terms of outputs and quality. Despite increased development aid towards health over the years, most of the low-income countries remain far from attaining the health-related Millennium Development Goals (MDGs). Performance based financing (PBF) has slowly gained favor as one of the provider payment mechanism that can partly address current performance challenges in the health sector. Cordaid piloted PBF in level IIIs primary health care facilities of Jinja diocese for 3 years (from 2009/10 to 2011/12). We conducted this study to assess the effects of PBF on the performance of the HCIIIs. The descriptive, cross-sectional study with a comparative component was carried out in 4 HC IIIs of Jinja diocese from 12th June to 22nd July 2012. We collected and analyzed annual performance data from health facility records on selected outputs for the 2 years before and after roll-out of PBF – comparing the study health facilities with an equal number of controls of the same level. We also analyzed data on selected quality indicators. After start of PBF, there was a positive trend in performance of the PBF-implementing health facilities relative to the controls. Human resource as a proxy marker of quality of inputs stood lower in the study health facilities than controls. We concluded that there was a positive trend in performance in the selected indicators in the PBF H/Cs. To create credibility to the observed performance, there is need to have a rigorous, regular and independent data verification plan built within the implementation process. We recommend piloting of this PBF approach in more health facilities and of bigger coverage like level IV health facilities and hospitals so as to gain more insight on what effect it can have on Uganda’s health system and related contexts.

Performance Based Financing, Effects, Level III Health Centers, Uganda