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Background: Designing effective incentive systems for village health workers (VHWs) represents a longstanding policy issue with substantial impact on the success and sustainability of VHW programs. Using performance-based incentives (PBI) for VHWs is an approach that has been proposed and implemented in some programs, but has not received adequate review and evaluation in the peer-reviewed literature. We conducted a process evaluation examining the use of PBI for VHWs in Kisoro, Uganda. In this system, VHWs are paid based on 20 indicators, divided among routine follow-up visits, health education activities, new patient identifications, sanitation coverage, and uptake of priority health services., Methods: Surveys of VHWs (n = 30) and program supervisors (n = 7) were conducted to assess acceptability and feasibility. Interviews were conducted with all 8 program supervisors and with 6 purposively selected VHWs to gain a deeper understanding of their views on the PBI system. Program budget records were used to assess the costs of the program. Detailed payment records were used to assess the fairness of the PBI system with respect to VHWs' gender, education level, and village location., Results: In surveys and interviews, supervisors expressed high satisfaction with the PBI system, though some supervisors expressed concerns about possible negative effects from the variation in payments between VHWs and the uncertainty of reward for effort. VHWs perceived the system as generally fair, and preferred it to the previous payment system, but expressed a desire to be paid more. The annual program cost was $516 per VHW, with each VHW covering an average of 115 households. VHWs covering more households tended to earn more. There was some evidence that female gender was associated with higher earnings. Education level and proximity to the district hospital did not appear to be associated with earnings under the PBI system., Conclusions: In a one-year pilot of PBI within a small VHW program, both VHWs and supervisors found the PBI system acceptable and motivating. VHWs with relatively limited formal education were able to master the PBI system. Further research is needed to determine the long-term effects and scalability of PBI, as well as the effects across varied contexts.

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