Describing the extent and forms of use of pay for performance (P4P) in Colombian healthcare.This was a descriptive study based on interviews and surveys of health insurance agency managers in Bogotá, Colombia. The authors relied on transaction cost theory to interpret the results.P4P was found to be used by contribution scheme insurers in an outpatient setting, basically in promotion and prevention; P4P is not being used in a hospital setting. Subsidized scheme insurers do not use P4P. Similarly, P4P is not being used in the case of so called associated users.P4P use in Colombia is limited. Colombian practice only partially validates the transaction costs theory approach to governance model attributes, one of which is incentive intensity.