Public hospitals desperately need a dose of competition to boost standards and efficiency.
I witnessed a terminally ill cancer patient being admitted to a top-rated private hospital in Amman. The room was sparkling clean and the nursing staff fully attentive, offering around the clock attendance to the patient. Sadly, the panel of specialist doctors decided there was little that could be done for the patient and so they advised that she better be transferred to the top-rated government hospital in Amman, where she was insured.
At the government hospital, the contrast in care was massive. Nurses at there never visited the room for regular checks, they came only when urged to come. They never administered the medicine; rather they insisted that each patient’s family companion should do it instead. The same applied to nasal feeding and maintaining the patient’s personal hygiene. The family was eventually forced to hire a professional nurse at their own expense.
It might be hard to be believe, but government hospitals are actually very well funded. The Ministry of Health’s public hospitals across Jordan had 4,468 beds in 2013. Their operational budget that year amounted to JD283 million and the budget for capital expenditure totaled JD111 million, resulting in the total budget for government hospitals to reach JD394 million. During the same year, government hospitals admitted 347,929 patients, who collectively spent 1.1 million nights at the hospitals. The average stay per patient was 3.2 days and the utilization rate of hospital beds was 68 percent. The average operational cost of treating each patient at a government hospital thus amounted to JD256 per day (JD356 per day when CAPEX budget is taken into account).
How does this compare to private hospital costs? The accounts of two private, ASE-listed hospitals offer insights. One has 200 beds and the second has 220 beds. Both generated combined revenues of JD32.2 million in 2013, of which around JD5 million was operational profit. Conservatively, assuming a bed utilization rate is 10 percent lower than average government hospitals (i.e. 61 percent), the two private hospitals charged JD336 per patient per night. Their costs stood at JD284 per patient per night. If we assume a similar bed utilization rate as that in government hospitals, the revenues per patient per night drop to JD303, and costs drop to JD255 per patient per night.
In summary, government hospitals across Jordan collected JD356 per patient, per day in 2013. While in the same year, profit-seeking private hospitals in Amman charged JD303 per patient per night—15 percent lower than government hospitals. Granted, specialist doctors in the private sector bill separately, so the total in private hospitals would be the same or a bit higher than government hospitals.
Government health care is far from “free.” It’s as expensive as care offered by state-of-the-art private hospitals in Amman. Furthermore, if a private hospital’s nursing staff acted like the nursing staff in a government hospital, and had the same hygiene standards, a private hospital will go out of business. Why? Because choice and competition exist for consumers of private health care services, while they don’t for public ones. There is a lack of competition amongst government hospitals which makes them far less accountable than private ones. Patients in government hospitals don’t have a choice, and the government hospital is guaranteed its operating budget every year regardless of its level of service. There’s no risk of losing paying customers or going out of business. If private sector hospitals were monopolies, one can expect the same dismal result. So long as the care providers think they’re offering a free service to the patients, and so long as patients in government hospitals believe they’re getting free health care, government hospitals will remain unaccountable and will fail to offer cost–effective and high-standard care. Public health policies in Jordan need to change. They should aim at maintaining free health coverage to large swathes of the population, while holding the care providers accountable through some level of competition that makes their funding contingent on the level of service provided. Offering patients covered by public health services much needed choice –by offering them the option of choosing the hospital with a cap on expenses- would help massively as well.
