Reforms to boost competitiveness in Jordan's health sector

As one of the Middle East’s pre-eminent medical tourism destinations and a regional leader in pharmaceuticals production, Jordan’s efforts to attract overseas patients are set to drive growth in the private hospital segment in the coming years.

Hospitals

Jordan had 104 hospitals in 2014, according to Ministry of Health (MoH) figures. Of these, 59 were private institutions, while the remaining 45 were run by a mix of state-backed bodies – the MoH operated 31 facilities, the military’s Jordanian Royal Medical Services (JRMS) had 12 and there were an additional two hospitals run by public universities. The number of hospital beds stood at 12,407 in 2014, up 5% from 12,081 the previous year, while the overall bed occupancy rate was 50.3% in 2014 according to the MoH’s “Annual Statistical Book 2014”.

Oversight & Development

In addition to operating its own hospitals, the MoH regulates and oversees the sector as a whole, while the High Health Council (HHC), chaired by the minister of health, is responsible for evaluating and determining health policy for the sector’s overall development. In respect to this, the health authorities launched a National Health Strategy covering the period between 2015 and 2019, in May 2015.

Hani Brosk Kurdi, secretary-general of the HHC, told OBG that the document has four key goals: ensuring provision of high-quality health care services; boosting investment in the health system; raising levels of medical and health tourism; and upgrading local production of pharmaceuticals. A broad range of sector actors have collaborated on the strategy, including the HHC, the MoH, private health providers and international actors such as the World Health Organisation (WHO).

Other initiatives being worked on by the public health authorities include a monitoring system to assess indicators, such as levels of communicable and non-communicable diseases, mental illnesses and emergencies. A pilot version of the system was introduced with the support of the WHO in two phases between May and December 2014. Kurdi said 80% of MoH hospitals are in the first phase of the system, which has focused on entering data via mobile devices into a health database.

Insurance

A variety of institutions provide health coverage in Jordan, including the Civil Insurance Programme, which mainly covers government employees and their families; the military; private companies; and the UN Relief and Works Agency (UNRWA), which provides services to Palestinian refugees. Once duplication is taken into account – some residents benefit from more than one type of insurance – in 2014 around 87% of Jordanians were covered by either public, private, military and UNRWA health insurances, which is a high percentage in comparison to the region.

The government has plans to establish a comprehensive health insurance system in the kingdom and a Cabinet committee was formed in December 2014 to study this, while the University of Jordan was assigned the task of conducting a study on the number of those not covered with health insurance, in addition to the cost of coverage. The Ministry of Planning and International Cooperation was assigned to study funding options in case a decision was taken to go ahead with the project. “Health insurance reform will likely take three to five years,” said Kurdi. “Nevertheless, the current situation is relatively good, as most uninsured Jordanians can access health services through support from the Royal Court, so coverage is effectively high.”

Expenditure

Total Jordanian health expenditure represented 7.2% of GDP in 2013, according to the World Bank, with public spending accounting for 66% of this and private spending the remaining 34%. Government health expenditure as a proportion of total government spending has risen from less than 10% in the first decade of the century to 17.8% in 2013, according to statistics from the WHO.

Such expenditure may prove difficult to maintain. In 2012 the HHC’s National Health Accounts (NHA) study described spending as occurring “at levels found typically among developed countries” and as being unsustainably high for Jordan as a middle-income country. To address this the study suggested the introduction of means testing for public health services and changes to drug prescription policies.

Pharmaceuticals spending of JD445.4m ($626.7m) represented 27% of health expenditure in 2012, equivalent to per capita spending of JD70 ($98). The NHA study attributed this to factors such as over-prescription, which it said was partly a function of a “lack of sufficient pharmaceutical regulatory policies”, and the practice of self-medication, which it said pharmacies take advantage of by dispensing the most expensive drugs available. To help to address the issue, in 2012 the HHC launched a four-year strategy to rationalise drug expenditures. The NHA study also recommended greater emphasis on primary and preventive care, with primary care accounting for 16.4% of public sector health care spending, versus 74.2% for curative care. There was also a focus on campaigns targeting key health challenges such as smoking, diet and exercise to tackle the costs of metabolic-related disease.

Public Hospital System

While seeking to rationalise some costs, the authorities continue to invest in expanding public health care capacity. MoH hospital bed numbers rose to 4693 in 2014, up from 4618 the previous year, as a result of the expansion of existing hospitals – though the number of JRMS hospital beds fell from 2439 to 2269 due to the closure of one of the service’s facilities. The most recent major public hospital to open its doors was a new 500-bed centre inaugurated in Zarqa in January 2015. The facility was built at a cost of JD65m ($91.46m) and has total floor space of 550,000 sq metres. Another recent opening is the 238-bed Prince Hashem bin Abdullah II Hospital, inaugurated in Aqaba in August 2013, while a new 100-bed hospital is under construction in northern Badi, and although it has faced a number of delays, it is set to open before the end of 2015.

More hospitals and expansions are in the pipeline. An MoH hospital is under construction in Salt and due to open in 2016. The authorities’ construction and expansion plans also include a new hospital in Amman, Princess Basma Hospital, at a cost of $70m, and investing $52m to expand the King Hussein Cancer Centre. In February 2014 Saudi Arabia agreed to provide Jordan with $176m to support these and three other projects, including $37m for maintenance work at the King Hussein Medical Centre.

The government authorities are also seeking to improve operations at existing hospitals, and the MoH’s key priorities for the development of the public health care system include digitising hospitals and records, improving the quality of regular and emergency care, upgrading administrative capabilities, and improving the system of referrals from general to specialised hospitals.

Refugees

Despite such investment, the presence of large numbers of Syrian refugees in the kingdom has put pressure on resources in the health care system, leading to high bed occupancy rates and straining some care specialities, especially obstetrics and orthopaedics. “There are more than 1.5m refugees in the kingdom, many of whom have medical problems, which is putting major pressure on hospitals of all types,” said Awni Al Bashir, president of the Arabian Medical Relief Society, a non-government organisation that provides health care to Syrian refugees. While previously entitled to free treatment, the Jordanian authorities ended this service for refugees in late 2014 due to the financial strain it was putting on the public health care system, though officials have stated they will continue to provide free vaccinations and treatment for communicable diseases. “So far, refugees are still finding ways to get treatment, but it is a strain on both hospitals and patients,” Al Bashir told OBG.

Private Hospitals

According to Abdullah Hindawi, CEO of the Private Hospitals Association (PHA), around 250,000 inpatients were admitted to private hospitals in 2014. “It was an excellent year for private hospitals, with occupancy levels rising from about 62% to around 68%,” he told OBG.

Spurred by the rising occupancy levels, new private facilities are continuing to open and existing centres are being expanded. In May 2014 the 10-storey, 165-bed Gardens Hospital was inaugurated, helping to bring up the total number of beds in the segment from 3989 in 2013 to 4345 in 2014, an increase of nearly 9%. Al Bashir also told OBG that at least four new hospitals are currently under construction in the kingdom, while Hindawi said that 225-plus new beds would be added in 2015 as a result of openings and expansions.

Medical Tourism

A key driver of business in the private sector is medical tourism, for which Jordan is the pre-eminent centre in the Middle East. In 2014 around 250,000 medical tourists came to the kingdom, more or less unchanged from 2013, but up from around 180,000 five years earlier. Hindawi said the segment is set to see renewed growth in 2015. “We are expecting an increase of between 5% and 10% in medical tourism arrivals,” said Hindawi.

One of the reasons for this is a rise in the number of Saudi patients visiting the kingdom following a decision by Saudi Arabia’s Ministry of Health to subsidise both medical treatment in Jordan and associated travel expenses for Saudi citizens. “We have seen a huge influx of Saudi patients since then. Saudi Arabia was previously the fourth- or fifth-largest medical tourism source market for Jordan, but it is now number one,” said Hindawi. The kingdom is also seeing growth from other feeder markets, and the industry is working on an agreement with the Algerian Ministry of Health to receive Algerian patients for treatment in Jordan. “We hope the agreement will be signed in 2015,” Hindawi told OBG.

To further boost business from abroad, the PHA is also working on a three-year marketing strategy to boost medical tourist numbers, and organised a medical tourism conference at end of May 2015 with the patronage of the prime minister. “The conference targeted countries where Jordan has particularly strong opportunities, such as the GCC states and East and Central Africa,” said Hindawi.

Regulatory Issuses

A major obstacle to the further development of medical tourism is the kingdom’s lack of medical liability legislation, which has deterred patients from the US and Europe in particular from travelling to Jordan for treatment. The prime minister’s office is currently working on a draft law addressing the topic, but its passage remains some way off. “It will be another two or three years before a medical liability law is in place,” Hindawi told OBG. “Before the law can be passed, there is a need to standardise medical procedures and ensure that all doctors are following the same ones.” This is complicated by the fact that Jordanian doctors train in a wide variety of countries.

New Framework

In the meantime, a decree amending the regulatory framework on private hospitals was published in the official gazette in March 2015, having been approved by the government the previous month. This should help to boost the segment’s competitiveness. Hindawi said the industry was happy with the new rules and had managed to secure some advantageous changes, including an increase in the permitted number of non-Jordanian physicians from 10% to 20%; permission to use electronic rather than paper medical files ( something previously only allowed in public hospitals); a reduction in the mandated frequency of hospital licence renewals from annually to once every five years; and the relaxation of rules on issues such as the number of mandatory ambulances and parking spaces hospitals are required to provide patients.

Pricing & Costs 

While the regulatory changes are likely to provide a fillip to the sector, private hospital operators continue to complain that industry prices, which are capped by the MoH and the Jordan Medical Association, the national doctors’ trade union, have not risen since 2008, despite above-inflation increases in hospitals’ operating expenses during that period. “Costs have gone up by 20%, but the government is reluctant to allow prices to rise, as it does not want Jordan to lose its competitive edge in medical tourism,” said Hindawi. Speaking in March 2015, he told OBG that the PHA had written to the prime minister requesting a one-off rise and that the HHC was studying the request.

Rises in electricity prices, which have more than doubled since 2011, have been one of the main factors pushing up operating costs. In order to address the issue the PHA has been looking into a project to create a photovoltaic solar power station that would provide cheaper electricity to hospitals. However, Hindawi said the project had been held up due to a lack of capacity on the kingdom’s electricity distribution network. “The grid around Amman only has around 2-3 MW of spare capacity, whereas the project will require around 15 MW,” he told OBG. He added that the PHA was working with the kingdom’s hotel, banking and renewable energy associations on a project to build 150 MW of new grid capacity in order to accommodate such projects.

Workforce Issues 

The industry also faces high staff turnover and recruitment difficulties in some areas. Private hospitals in particular find it hard to maintain nursing staff levels due to competition from better-paying institutions in GCC countries. Hassib Sahyoun, CEO of MedLabs, the kingdom’s largest laboratory testing company, told OBG, “The brain drain is a drag on the sector, as Jordanian health institutions and companies simply cannot compete with the salaries Gulf states are willing and able to offer.” That said, the wage gap has been decreasing over the past three years, which is expected to help alleviate this difficulty.

Hindawi said that the problem was most acute in a number of specialist fields and emergency care. In order to address the shortfall, hospitals were previously allowed to employ foreign nurses, but the government later decided to forbid the practice. However, Hindawi told OBG that the Ministry of Labour had formed a committee to address the issue and had provisionally agreed to allow hospitals to employ foreign nursing staff, up to a cap of 10% of their total nursing workforce. “A memorandum of understanding should be signed on the matter soon. The nursing association was previously opposed to the move, but recently indicated that it could agree to it in cases in which there are no Jordanian nurses available to fill positions,” he said.

While the private sector struggles to maintain nursing staff levels, in the public sector lower wages in hospitals have led to difficulties recruiting and retaining doctors, again because of strong competition from GCC countries.

The authorities are currently working with the WHO on a national strategy for human resources in the health care sector to address this and other issues. “The WHO has provided us with good support on the strategy,” said Kurdi, adding that the document should be ready in 2015.

Pharmaceuticals Industry

Jordan is a major player in the regional pharmaceuticals industry. According to World Trade Organisation data, the kingdom was the largest exporter of pharmaceuticals in the Arab world in 2013. Exports from the country grew from $631m in 2012 to $722m a year later, making it the third-largest in the MENA region, behind Israel with $6.09bn and Turkey at $814m.

The largest Jordanian pharmaceuticals manufacturer is Hikma, which operates 27 production facilities in 11 countries and specialises in producing branded generics, with a range of nearly 500 products, as well as products under licence from other companies. Dalia Jawhari, Hikma’s vice-president for research and development for the MENA region, told OBG that it is currently focusing on expanding its oncology portfolio – including both oral and injectable products – in the US and MENA markets. “Oncology is a fast-growing market in Jordan and in the Middle East, as diagnosis is becoming more efficient and patients are coming forward for treatment more frequently than in the past,” she said.

As part of such efforts, in September 2014 the company inaugurated an oncology active pharmaceutical ingredients (API) plant in Jordan. “The new plant will play a critical role in providing the APIs we need, and its location in Jordan is advantageous as there are fewer patent barriers in the Middle East than in the Europe and US,” Jawhari said, though she added that the intellectual property landscape in the kingdom was likely to become more complicated as companies increasingly file patents there. In addition to oncology, Jawhari told OBG that growing markets in the kingdom and the wider region include antidepressants and treatment for metabolic diseases such as diabetes.

The kingdom is also increasingly becoming a regional centre for pharmaceuticals research. “Jordan has historically hosted a great deal of pharmaceuticals industry activity, so there are many people with expertise in the field, and there are more and more local contract research firms opening up here, doing both national and international work,” Jawhari told OBG, adding that such firms generally had a good reputation and carried out work for both regional and foreign companies.

Better Laboratories

In addition, the kingdom hosts a rapidly growing laboratory segment, which increasingly has more sophisticated capabilities. “Less than 1% of samples are now sent out of the kingdom for analysis, and usually only in the case of very specific testing that Jordan does not offer,” said Amid Abdelnour, CEO of Biolab, a group of medical diagnostic laboratories.

Companies are also investing in expanding laboratories’ capabilities. “We are working to introduce new tests, principally in the fields of genetics and neonatal screening for newborns,” said Sahyoun, adding that there was a great deal of demand in both Jordan and the region for such screening.

More generally, growing demand for testing is helping to drive the development of the market. “Doctors have become increasingly reliant on tests and ordering an adequate number of them is now part of the medical culture, which wasn’t the case 10 years ago,” said Sahyoun. Rising insurance levels have also helped. He said, “20 years ago fewer than 10% of patients ordering tests were insured, compared to around 60% now, which is allowing doctors to order the tests that they need to perform.”

As in the private hospitals segment, laboratories complain that prices are fixed by the MoH and only occasionally increased, despite rising operational costs. “The last price rise was in 2008 and before that in 1995,” Sahyoun told OBG. “In 2008 a committee established to discuss the issue recommended that prices be reviewed every three years, but this has yet to materialise.”

New Health Challenges

As in many Middle Eastern countries, diabetes is a growing concern in Jordan. In 2014, 11.4% of adults in the kingdom suffered from the condition, according to World Bank data, placing it in the top quarter of countries worldwide by prevalence.

“Metabolic diseases, such as diabetes, are growing at a faster rate, primarily because of lifestyle issues,” Jawhari, whose firm has run a number of awareness campaigns on the issue, told OBG.

It is estimated that 51% of Jordanians engage in low levels of physical activity and 57% have a low intake of fresh fruit and vegetables, according to the WHO, while 57% were also overweight or obese. “Slowly people are becoming more aware of the problem, especially among the younger generation. However, public awareness is still on the low side and rates of non-communicable diseases are still rising, so there is a need for more publicity and educational programmes,” said Jawhari. She also described smoking as another major health issue. Around 64% of adult males in the kingdom smoked tobacco in 2012, according to the World Bank, though the level was lower for women, at 10%.

Outlook

Jordan is set to remain one of the region’s most popular medical tourism destinations in the coming years, with further growth likely to materialise in 2015 as a result of factors such as increased patient visits from neighbouring Saudi Arabia and other GCC markets. Current plans to introduce a medical liability law should also help the kingdom to tap into Western medical tourism markets, although this is likely to take some time to realise. In the meantime, reforms to the private hospital regulatory framework are set to improve services and further boost the sector’s global competitiveness.