The role of contractual arrangements in improving health sector ...

Jordan
• Enhancing equity by referring insured patients to other sectors in order to provide
access to the Ministry of Health services for poor and disadvantaged people who
cannot afford treatment cost in private hospitals.
• Taking into consideration the high unemployment rate (16%) and the high
percentage (12%) of people below the poverty line, contracting out health
services is becoming a social policy tool in Jordan.
• Containing health costs by using underutilized hospital beds in private and other
public sectors, instead of investing in building new hospitals.
• Providing incentives for private hospitals to stay in the business and develop their
services to attract more patients from other countries. This will have a positive
impact on macroeconomic level and increase the national income from “medical
tourism” which was about JD 400 million in 2002.
• Relieving the Ministry of Health of the provision of some highly specialized
medical services that require costly investment of capital and human resources.
This will allow the Ministry of Health to divert resources, develop and extend
primary health care services.
• Changing the negative role of the government towards private hospitals to a more
positive and supportive role. Instead of buying the bankrupt private hospitals (e.g.
Queen Alia Hospital in Amman, Al-Nadim Hospital in Madaba, and the Specialty
Hospital in Mafraq) the government policy now encourages purchasing services
from private hospitals to help them prosper and stay in business.
• Building partnership between the public and private sectors based on serving
mutual interests of both parties.
Reasons for the private sector to enter into contractual arrangements with the
Ministry of Health include the following.
• Fully utilizing the bed capacity (1905 beds) and the advanced diagnostic
technology in private hospitals in order to achieve better return for investment
and increase net profit.
• Ensuring regular cashflow to meet recurrent hospital expenses.
• Strengthening the competitive situation of the private hospital. It is considered as
government accreditation.
• Securing a stable and continuous revenue. Contracting with the public sector
increases the revenue mix of the private hospitals and safeguards them against
economic fluctuation.
Political and legal environment
Jordan began adopting a liberal economic policy as early as 1985 based on the
redefinition of the roles of the government and the private sector. The primary
responsibility is being assigned to the government for supervision, follow-up,
regulation, safeguarding rights and ensuring equality of opportunities and
competition. In 1996, the Jordanian privatization programme was officially
announced. The main objectives of the programme were: attracting private
investment; improving the efficiency of enterprise; and developing the local market to
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