Estonia: Purchasing & Payment Systems

After the fall of the Soviet Union, Estonia inherited a health system that was oriented toward hospital-based care.  Primary care physicians were mainly a point of contact who would refer patients to their preferred specialist.  In 2006, Estonia introduced a series of health reforms to strengthen various aspects of primary care, which included health system governance reforms, promoting more evidence-based approaches in medicine, strengthening the health workforce, improving health management information systems, and creating new, blended payment mechanisms).  

Under the reforms, primary care physicians who participated in the Estonia Health Insurance Fund were paid through a combination of provider payment methods: a fixed monthly allowance, a per-patient capitation payment, fee-for-service for priority treatments, adjustment payments based on the distance to the nearest hospital, and the Quality Bonus System (QBS) performance-related payment mechanism.  The majority of funds flowed through fee-for-service (20%) and capitation payments (60%). 1 While representing a small proportion of Estonia’s primary health care budget (less than 2%), QBS was introduced in order to incentivize primary care health workers to focus on the prevention and management of chronic diseases and to reduce avoidable hospitalizations. 2 Providers received additional payments based on how they performed on a series of indicators for disease prevention, chronic disease management, and additional activities.  

In the first nine years after implementation, Estonia saw improvements in chronic disease prevention and management for 24 out of the 27 QBS indicators. The increases ranged from 5% to 45%, with an average improvement across all indicators of 18.5 percentage points. Service coverage for most indicators jumped from about 50% of the target population covered to about 70%. 3 Additionally, there was some evidence that patients of participating physicians were less likely to be hospitalized for chronic conditions compared to patients of non-QBS participating physicians.  


  1. Habicht T, Estonia: Primary health care quality bonus system in Cashin C, Chi Y, Smith P, Borowtiz B editors, Thomson S.  Paying for Performance in Health Care: implications for health system performance and accountability. Berkshire, England: Open University Press.  2014.
  2. Kurowski C.  The state of health care integration in Estonia.  Washington, DC: World Bank.  2015
  3. World Health Organization (WHO). Good Practice Brief: Pay for Performance in Estonia: A transformative policy instrument to scale up prevention and management of noncommunicable diseases.  Geneva: WHO. 2015