Performance-based Incentives for Health: Demand- and Supply-Side Incentives in the Nicaraguan Red de Protección Social

While it is difficult to disentangle the individual impact of performance-based, demand-side interventions from the impact of performance-based, supply-side incentives, a rigorous evaluation of the program shows that their combination can work to increase the utilization of health services among the poor, and to improve health outcomes significantly. An evaluation undertaken ten months after demand-side incentives were stopped in certain areas revealed that the utilization of preventive health care services remained high. It is possible, therefore, that a well-targeted strategy of supply-side, performance-based incentives on its own may be sufficient to maintain high levels of health care service utilization, at least among poor households that have benefited from a relatively long period of education on the importance of preventive health care, while receiving demand-side financial incentives. However, the RPS evaluation results cannot exclude that, even after their removal, demand side incentives continue to exert, at least in the short term, a positive impact on service utilization. In the implementation of future RPS-type approaches, research efforts should focus on and be devoted to “unbundling the bundle” and assessing the relative contribution of supply vs. demand-side incentives.