• Deaths from the poor quality of healthcare services represent about 15% of overall deaths in low and middle-income countries (LMICs).
• Most LMICs still contend with high out-of-pocket healthcare payments and low insurance coverage within volume-based (fee-for-service) care systems.
• Unlike the volume-based approach, value-based healthcare (VBHC) rewards healthcare providers for the value of services they provide to patients, not the quantity.

Between 5.7 and 8.4 million people die in low and middle-income countries (LMICs) every year because of the poor quality of healthcare services, estimates suggest. This represents about 15% of overall deaths in those countries. In fact, poor quality of care now causes more deaths than a lack of access to healthcare services. It poses a major barrier to achieving Universal Health Coverage (UHC) as outlined in the Sustainable Development Goals (SDGs).

With most LMICs set to fall short of the 2030 UHC targets and the global economic situation placing increased strain on healthcare systems, new approaches are urgently needed to enable countries to “do more with less”. Transitioning from volume-based to value-based healthcare systems that incentivize quality and health outcomes has a considerable role in achieving this while expediting UHC progress and boosting citizens’ trust.

Integrating value-based payments into social health insurance

Most LMICs still contend with high out-of-pocket healthcare payments and low insurance coverage within volume-based (fee-for-service) care systems. A systematic review of health insurance coverage in 100 LMICs suggests an average health insurance coverage level of 31%, with African countries attaining just 12.8%.

In Africa, more than half of the population still lacks access to essential healthcare services. In contrast, the quality of services is inadequate and considered the least-performing UHC indicator.

The traditional volume-based or fee-for-service (FFS) payment system widely used in the universal healthcare systems of several countries, including LMICs, has disadvantages that include prioritizing quantity of health services over quality, exploitation, overuse of expensive procedures and treatments, fragmented care, inefficiency and wastage, cost escalation, inequities in access, patient dissatisfaction and sub-optimal quality of care.

Unlike the volume-based approach, value-based healthcare (VBHC) rewards healthcare providers for the value of services they provide to patients, not the quantity, where value is defined as the quality of care delivered relative to the cost. VBHC models track and report key performance metrics that promote transparency and provider accountability, motivating health providers to provide quality care. Furthermore, payers and patients are empowered with information to choose providers and treatments that best serve their health needs. For LMICs, where financial resources are often limited, VBHC can help to optimize resources and incentivize high performance.

VBHC models may integrate alternative payment structures such as capitation (the amount is fixed at the same level for everyone) and bundled payments, encouraging providers to prioritize preventive care, early disease detection, and cost-effective treatments. They may involve pay-for-performance components, like offering financial incentives for attaining selected quality and cost benchmarks. To date, few successful examples of VBHC are being implemented in LMICs. One leading example is MomCare in Kenya and Tanzania, where a digitally-enabled care bundle for expectant mothers has ensured safer pregnancies for more than 50,000 mothers and their babies by ensuring adherence to care protocols and quality services.

Pay-for-performance: a stimulant for transforming healthcare

Integrating pay-for-performance within the broader value-based care framework can stimulate more patient-centered, outcomes-driven, cost-effective care delivery systems in LMICs. In pay-for-performance, payers are the entities that reimburse healthcare providers for the services they deliver based on agreed contracts or outcomes. This may include insurers, governments, donor programs or an employer, depending on how a country’s healthcare payment model operates.

Pay-for-performance programs reward healthcare providers for evidence-based practices and should incorporate patient feedback on care experience as critical elements of quality measurement. This inclusive approach empowers patients to make care decisions and hold providers accountable.

A notable example of how pay-for-performance can transform care delivery is the Leapfrog Group’s value-based purchasing (VBP) program, which sets a new standard for excellence for healthcare providers and takes advantage of employer purchasing influence by rewarding hospitals for consistently delivering high-quality care.

VBHC leads to fiscally responsible, high-quality healthcare and reduces the long-term financial burden on health systems. LMICs can address critical health sector challenges by incorporating incentive programs into providers’ income structures to improve healthcare quality and expand their services to remote and marginalized areas.

Nigeria: quality performance payments by payers

VBHC is a relatively new concept gaining momentum in UHC discourse in LMICs. As healthcare payers (such as insurers and governments) prioritize value over volume, it becomes more apparent that better population health and financial sustainability are not mutually exclusive.

The Lagos State Health Management Agency (LASHMA) is a pioneering example of innovative and progressive action to incentivize quality improvement within a social health insurance program, setting the pace for other states in Nigeria. LASHMA has instituted differential tariffs based on the quality ranking of healthcare providers, using the internationally accredited SafeCare Standards.

SafeCare is a standards-based quality methodology used by 7,000 healthcare facilities in LMICs (mainly in Africa) to improve their quality of care in a structured and incremental way. It measures, guides, and certifies the quality of healthcare services – rating facilities from the lowest (level 1) to the highest (level 5). LASHMA is the first health insurer to reward healthcare providers based on their quality standards, offering different reimbursements for health providers with a SafeCare Level 4 and above.

By objectively measuring quality and creating a transparent process for rewarding it, LASHMA is promoting a culture of excellence for enlisted healthcare providers. As the agency embarks on the arduous task of propelling Lagos State, the most populous state in Nigeria, towards UHC, it is not just altering the healthcare landscape but igniting a beacon of hope that quality, accessible healthcare is within reach for Nigerians and beyond.

As governments and development partners gather in New York for the UN High-Level Meeting on UHC in September 2023, we advocate for quality of care to be put at the top of the UHC agenda. By taking bold action to incentivize quality of care, LMICs can transition from volume to value-based healthcare systems that prioritize health outcomes, leapfrog UHC progress and boost citizens’ trust.