Turkey merged four health insurers and put pay-for-performance in all 850 state hospitals

Before 2003, Turkish health financing was a patchwork: four social insurance schemes, a means-tested Green Card for the indigent, and only about a quarter of the vulnerable population insured. Half of Turks reported difficulty affording medicines and other health costs. The government launched a ten-year Health Transformation Program with World Bank support (Health Transition Project, US$60 million, 2004-2009).

The reform rebuilt the payer side first: the four schemes were consolidated into one fund under the Social Security Institute, and every Ministry of Health hospital moved onto prospective contracts with global budgets, with a modified prospective system for private and university hospitals. At the same time 850 Ministry hospitals introduced a Performance Based Supplementary Payment — one of the first attempts at performance pay at this scale in a public service — while directors got discretion over revolving funds, procurement and investment.

Delivery followed the money. Family medicine, piloted in Duzce in 2005, spread to 33 provinces covering 23.1 million people by project close. Insurance among vulnerable groups rose from 24 percent in 2003 to 82 percent in 2008 (87 percent of the whole population), Green Card membership jumped from 2.5 to 10.2 million, and patient satisfaction in public hospitals rose from 38 percent in 2004 to 66.6 percent in 2009. The Independent Evaluation Group rated the outcome Satisfactory; the stall was structural — the Hospital Autonomy Act never passed, so the Ministry remained a direct provider.

Merge the payers first, then pay hospitals for output

Pooling the four schemes created one risk pool big enough to cross-subsidize the poor and one purchaser with real bargaining power over hospitals.

Prospective global budgets replaced open-ended cost-plus reimbursement, which is what made expansion affordable rather than merely generous.

Performance pay worked because it arrived together with budget authority for hospital directors — incentives without control over spending are noise.

Expanding the Green Card made the benefits visible to voters early, which kept the decade-long program funded through elections.

Fix who pays before you argue who serves. One pool gives the money a single voice; paying per case turns hospital staff from budget-rationed civil servants into operators competing for patients.

A follow-on US$75 million Health Transformation and Social Security Reform Project was approved in June 2009 to extend family medicine nationwide and broaden performance management. The program's next generation planned output-based financing to tackle non-communicable diseases. Turkey's reform became a reference case for middle-income health transitions, with coverage at 87 percent of the population by the time evaluators closed the books in 2014.