A new policy brief by researchers from the Ifakara Health Institute (IHI) and the London School of Hygiene & Tropical Medicine (LSHTM) sheds light on how healthcare providers in Tanzania are paid — and why it matters for the country’s goal of achieving Universal Health Coverage (UHC).

What is this about?
The study, conducted between 2023 and 2025, looked at how different “provider payment mechanisms” (PPMs) — the ways hospitals and clinics are paid for the services they give — affect the quality of care, providers’ experiences, and efficiency in the health system. Tanzania currently uses a mix of methods such as fee-for-service and capitation. While each has strengths, this mix creates challenges like delays, low payments, and heavy reporting demands.

Why does it matter?
In 2023, the Government of Tanzania passed the Universal Health Insurance (UHI) Act, which is expected to shape the future of healthcare financing in the country. The study shows that how providers are paid will play a key role in whether UHI succeeds. Well-designed payment methods can motivate providers, improve service delivery, and ensure fair and timely payments — all of which are essential for better healthcare access.

What did the study find?

• Providers prefer a capitation model, but only if it ensures timely, adequate payments, fair incentives, and simpler reporting.
• Fee-for-service payments (as used by NHIF) were seen as more reliable, especially for expensive treatments, though they came with heavy paperwork.
• Capitation systems (like those used in ICHF and HBF) faced issues of low rates and delayed payments.
• Service quality was broadly similar across schemes, but NHIF clients reported better access to medicines and more trust in facilities.

Who is behind this work?
The study was led by Dr. Peter Binyaruka (IHI), with co-authors Francis Ngadaya (IHI), John Maiba (IHI), Prof. Josephine Borghi (LSHTM), and Prof. Timothy Powell-Jackson (LSHTM).

It was carried out under the PPMT Project, a collaboration between the Ifakara Health Institute and the London School of Hygiene & Tropical Medicine, with funding from UK Research and Innovation (UKRI) through the Medical Research Council (MRC).

The way forward
Researchers recommend designing a payment system that reflects providers’ needs, ensures reliable funding, and balances performance incentives with fairness. This, they argue, will be critical to making Tanzania’s UHI Act work for both providers and patients.

>> Read policy brief, here.