Major Applied Research Paper No. 1

i ABSTRACT As Phase I of a three-phase Health Financing and Sustainability project, this paper reviews the relevant concepts and literature and presents the preliminary field work design for research regarding provider incentives and productive efficiency in government health services. In addition to providing a basic conceptual framework of the issues, the authors present empirical and anecdotal evidence from developed and developing countries to assess the potential for provider incentives to improve the efficiency (as well as equity and quality) of health care in developing countries. The discussion includes both monetary and non-monetary, physician and hospital incentives. Finally, the authors consider both the methodological problems and prospective field work activities necessary for completion of phases II (field work) and III (analysis) of the applied research project. ii ACKNOWLEDGEMENTS