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Background Globally most neonatal deaths occur within the first week of life and in low-income and middle-income countries. Strengthening health system linkages for frontline providers—such as lay midwives providing home-based obstetrical care—may improve neonatal outcomes in these settings. Here, we conducted a quality improvement study to increase the detection of neonatal complications by lay midwives in rural Guatemala, thereby increasing referrals to a higher level of care.Methods A quality improvement team in Guatemala reviewed drivers of neonatal health services provided by lay midwives. Improvement interventions included training on neonatal warning signs, optimised mobile health technology to standardise assessments and financial incentives for providers. The primary quality outcome was the rate of neonatal referral to a higher level of care.Results From September 2017 to September 2018, participating midwives attended 869 home deliveries and referred 80 neonates to a higher level of care. A proportion control chart, using the preintervention period from January to September 2017 as the baseline, showed an increase in the referral rate of all births from 1.5% to 9.9%. Special cause was obtained in January 2018 and sustained except for May 2018. The proportion of neonates receiving assessments by midwives in the first week of life increased to >90%. A trend toward an increasing number of days between neonatal deaths did not attain special cause.Conclusions Structured improvement interventions, including mobile health decision support and financial incentives, significantly increased the detection of neonatal complications and referral of neonates to higher levels of care by lay midwives operating in rural home-based settings in Guatemala. The results show the value of improving the integration of lay midwives and other first responders into neonatal systems of care in low-resource settings.