Cost-effectiveness analysis of the decentralized facility financing and performance-based financing program in Nigeria

Background: Nigeria piloted decentralized facility financing (DFF) and performance -based financing (PBF) programs under the Nigeria State Health Investment Project (NSHIP), funded by the World Bank. It aimed to increase the utilization and quality of maternal and child health (MCH) services. Although many low- and middle-income countries have launched or piloted DFF and/or PBF like programs and conducted impact evaluation, very few studies related DFF or PBF's impact to its cost. This study evaluates the incremental cost-effectiveness ratios (ICERs) of facilities with DFF or PBF compared to comparably funded health facilities without it. Methods: This study used a quasi -experimental research design. Local government areas (LGAs) in the three states under NSHIP were randomly assigned to the PBF group, where health facilities received payments based on their performance, and to the DFF group, where payments were not tied to performance. An additional three states served as the control group without additional funding. Reflecting the health system perspective, incremental financial costs were assessed for program implementation and verification, consumables, and donor supervision. Net effectiveness on coverage and quality were assessed through difference-in-differences calculations between baseline and endline facility and household surveys. The Lives Saved Tool and literature were used to convert statistically significant coverage changes to lives saved and quality-adjusted life years (QALYs) gained. Results: Compared to the control group the incremental costs of DFF and PBF were $45.2 million and $87.3 million in 2015 US dollars, respectively. In comparison to the control group, DFF had a major impact on Bacillus Calmette-Gu & eacute;rin (BCG) and diphtheria, pertussis and tetanus (DPT)], increasing their coverage by 13.4% (P<0.001) and 9.7% (P<0.05), respectively while PBF increased the rate of skilled birth attendance (SBA) by 9.1% (P<0.05), and use of modern contraceptives by 5.7% (P<0.05). Overall, the quality of care was also improved under the DFF and PBF when compared to the control group. Compared to the control group, DFF and PBF were estimated to save 756 and 1,679 lives per year respectively, with 17,878 and 39,605 QALYs gained. The corresponding ICERs of the DFF and PBF program were $904 and $787 per QALY gained based on the coverage impacts alone. Combined with the improvement of quality of care, the ICERs of the DFF and PBF program were reduced to $224 and $296 per QALY gained when compared to the control group, respectively. Conclusions: Compared to the control group, Nigeria's DFF [ICER of $224 per QALY gained or 8.4% of gross domestic product (GDP) per capita] and PBF (ICER of $296 per QALY gained or 11.1% of GDP per capita) program proved cost-effective by the standard of 1.5 times GDP per capita in Nigeria. Whereas PBF is nearly twice as expensive as DFF, it saves many more years of life as compared to DFF during the same period-PBF is more effective than DFF and DFF more efficient than PBF. These results hold both with and without incorporating quality improvements and suggest that DFF and PBF are among the cost-effective interventions for strengthening MCH services in Nigeria.