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

Jordan
monitoring administrative arrangements to ensure that providers adhere to the
conditions specified in each agreement.
The fee-for-service system, which is prominent at the Ministry of Health,
creates incentive for conducting multiple, sometimes unnecessary procedures, as well
as over-billing by providers. As this type of payment mechanisms has proved to be
less efficient worldwide and does not promote equity and quality (Hsiao W., 1997),
the Ministry of Health has introduced new payment mechanisms such as leasing
private hospital beds for a fixed payment per bed or a defined payment for a bundle
fee per episode. The HID has also initiated steps to computerize its entire accounting
system and network it with other governorates.
The Ministry of Health, with technical support from PHRplus project (funded by
USAID), is now implementing a Health Insurance Pilot Project (HIPP) to expand the
administrative and technical capacity of the staff of the HID in the areas of contract
design, contract monitoring and contract enforcement. This pilot project is based open
bidding procedures and is expected also to have a positive impact on improving
contracting skills of private hospitals.
The existing bureaucratic set-up of the Ministry of Health does not provide the
Health Insurance Directorate (HID) with sufficient authority and flexibility to manage
contracts efficiently. The laws governing the HID are inflexible and the decisions
related to contractual arrangements, including reimbursement rates, are taken at the
central level of the Ministry of Health. The civil health insurance budget is also
managed at the central level and it is outside the control of its managers. This
exogenous budgeting system affords very little control or independence in financial
decision-making or monitoring expenditures (Jordan’s National Health Accounts,
Draft Report, 2004)
Some genuine efforts have been made recently by the HID to undertake cost
and price analysis prior to negotiations for new contracts. The lack of comprehensive
and advanced computerized information system is a real obstacle facing the
development of these efforts. Capacity to undertake a price and cost analysis also
needs urgent strengthening in order to expand health insurance coverage through
health insurance reform which is considered now a top national health priority.
Monitoring and controlling the quality of the contracted services is one of the
major challenges facing the Ministry of Health. Current monitoring procedures for
contracts are not efficient, especially for measuring the quality and appropriateness of
the health services provided by the private sector.
Private sector capabilities, strengths and weaknesses regarding contracting
Compared with the public sector, the private sector has better capabilities and
experience in terms of technical and financial management capacity. Most private
hospitals have introduced computerized information systems to manage their
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