A healthy investment: Limited government resources are driving expansion of the private health care system

Rising health expenditure and Jordan’s status as the leading medical tourism destination in the Middle East are helping to drive expansion in the kingdom’s private hospital segment, which also benefits from the availability of well-trained medical staff and comparatively low treatment fees. Challenges include rising operating costs – in particular electricity bills – as well as the absence of medical liability legislation.

Structure

There were 106 hospitals, 435 childhood support centres and 700 health centres, with an average of 21.5 beds per 10,000 people as of 2013, according to the Private Hospitals Association (PHA). Of the hospitals, 32 were Ministry of Health (MoH) facilities, nine belonged to the Royal Jordanian Medical Services (the military’s health care services), two were university hospitals and 63 were private. According to the MoH, the number of hospital beds in 2012 stood at 12,106, up from 11,991 in 2011 and 11,029 in 2007. Of these, 4612 were in MoH hospitals, 3453 in other state hospitals and 4041 in private hospitals.

Health Spend

Jordan’s health care expenditure stood at around $2.45bn in 2012, based on World Bank figures. As a proportion of GDP, spending totalled 9.8% in 2012 – a high figure by regional standards when compared to Saudi Arabia’s 3.2%, Iraq’s 3.6% and Lebanon’s 7.6%. Health spend per capita was $388 in 2012, up from $252 in 2007. According to the World Bank, government health spending has risen substantially in recent years, from just over 12% of total spending in the mid2000s to 17.8% in 2012; however, this was down from a peak of 19.5% in 2010. Government spending on health care accounted for 63.1% of total health expenditure in 2012, though this figure has varied significantly over the past decade and fallen in recent years.

Coverage & Insurance

According to the “Jordan National Health Accounts 2010-11” report, published in July 2013 by the High Health Council (HHC), 87.5% of Jordanians had health insurance as of 2011, including 6% with more than one form of coverage. A total of 42% of the population has coverage from the Civil Health Insurance Programme, which mainly covers government workers and their dependents, 27% have military-provided insurance and 9% have private coverage. The UN Relief and Works Agency (UNRWA) also provides health insurance to Palestinian refugees, though this is limited in scope. In addition, the Royal Court contributes toward medical treatment costs for uninsured Jordanians who are categorised as “unable to pay”. The HHC has been mandated with expanding health insurance uptake and adopted a roadmap to achieve comprehensive coverage. “There should be universal health coverage for all Jordanians within three to five years,” Hani Brosk Kurdi, HHC’s secretary-general, told OBG.

Government-provided insurance typically only covers treatment in state-run facilities, where treatment is heavily subsidised; however, there are agreements in place for the transfer of patients to private hospitals under a range of circumstances, including when state hospitals are at capacity or if the state sector is unable to provide the required treatment. Patients with so-called first-class state insurance automatically receive private treatment. The cost of government referrals to private hospitals was about $124m in 2012, up sharply due to increased pressure on MoH facilities as a result of the influx of large numbers of Syrian refugees. Health facilities are also stretched to their limits, especially in the north where refugee numbers outweigh locals in certain areas such as Mufraq.

Private medical insurance premiums totalled JD117.7m ($166.26m) in 2012, up 11% in nominal terms, while paid claims stood at JD105m ($148.32m), up 7%. Most private health care expenditure – 77.3% according to World Bank data – remains out-of-pocket, though the World Health Organisation (WHO) suggests that this figure has fallen as a proportion of total spending in recent years, from 41.6% in 2007 to 24.7% in 2012.

State Sector

In addition to hospitals, as of 2012 the MoH operated 1502 health centres, including 464 primary and comprehensive health centres and 384 dental clinics. It employed 13,075 medical staff in 2012, up from 9758 in 2007, including 4241 physicians (up from 3702 in 2007) and 6302 nurses (up from 4139). The largest MoH hospital, which is also the country’s largest hospital, is Al Bashir Hospital in Amman. Recent projects and expansions in the state sector include the addition of two new floors at Prince Hashem Military Hospital in Zarqa in February 2014, adding 114 beds and six new operating theatres. Also in February, the University of Jordan Hospital opened a new psychotherapy and psychiatry unit specialising in the treatment of post-traumatic stress disorder.

The MoH directly controls most of its hospitals, with high-level MoH officials responsible for setting budgets and recruiting staff. It has been experimenting with other management models such as granting Prince Hamzah Hospital in Amman autonomy over its budgets and operations since 2009; however, the ministry does not appear keen to extend the model to other hospitals. Meanwhile, Prince Khaled Hospital in Amman, which opened in 2006, has operated under a special arrangement since 2008 that allows it to bring in doctors from the private sector and from military hospitals to conduct medical procedures. No other MoH hospitals are allowed to do this at present.

Expanding Private Sector

Most private hospitals are located in Amman, though there are six in Irbid, four in Zarqa and small numbers in several other cities. The segment is currently witnessing a wave of expansion, driven by the need for additional capacity. “The private sector is short of at least 1000 beds,” said Dr Awni Al Bashir, president of the Arabian Medical Relief Society, an NGO that provides health care to Syrian refugees. “Most hospitals are expanding and two or three new ones should open between now and 2016,” said Abdallah Al Hindawi, CEO of the PHA.

The planned new facilities include the Royal Hospital and Gardens Hospital, both of which are under construction in Amman. Hospitals seeking to expand their existing facilities include Istishari Hospital, which launched in 2006 and is the newest private hospital. It intends to build on land adjacent to its existing site in west Amman within the next three years. “We want to expand because on top of natural population growth, the population of Jordan grows exponentially with every regional crisis. Furthermore, in addition to the arrival of refugees, such crises also typically result in large influxes of medical tourists,” said Zahira M Haram, chief marketing and experience officer at the hospital.

Meanwhile, Al Essra Hospital is set to start work on two new towers towards the end of 2014, with the aim of increasing capacity by 100 beds, at a cost of around JD5m ($7.06m). Dr Nael Al Masalha, Al Essra’s chairman and director-general, told OBG that the project will take about two years to complete and is aimed primarily at meeting the demand of medical tourists.

Other examples include the planned expansion of Shmaisani Hospital from 81 beds to 96 by August 2014 by adding a new floor and a JD3m ($4.24m) extension at the Speciality Eye Hospital completed in early 2014.

Most of the development is taking place in Amman, where the private hospitals are concentrated. Expansion to other parts of the country is limited by staffing concerns. “Aqaba could attract large numbers of patients from Saudi Arabia,” said Al Hindawi. “However, the challenge is to get good doctors to work in the city.” Nevertheless, it is seeing investor interest: in late March 2014 real estate developer Al Maabar signed a memorandum of understanding with MIS Solutions to establish a minimally invasive surgery centre as part of the second phase of its Marsa Zayed project in Aqaba.

Foreign-backed hospitals in Amman include the Arab Medical Centre and Istiqlal Hospital. Most private hospitals are owned by local investors, but industry players say there is growing interest from abroad. “Jordan is starting to receive enquiries from Gulf investors in particular, for example from Kuwait and Bahrain,” said Mohmoud Sarhan, CEO of the Arab Medical Centre.

Pricing & Costs

Prices in the sector are capped by the MoH, which provides a price list for hospital facilities such as rooms and food, and also by the Jordan Medical Association (a doctors’ trade union), which determines prices for treatment-related costs such as operations, diagnostic tests and physicians’ salaries. Private hospital operators complain that prices have not risen for several years. “Margins are thin as prices are fixed and do not rise with increasing costs such as salaries and electricity prices,” said Sarhan. Hospital administrators say that electricity prices are a particular challenge for the sector, with energy bills accounting for about 20% of operating costs, according to the PHA. “The price of electricity has risen from roughly 113 fils ($0.11) per KWh in 2011 to around 250 fils ($0.35) today,” said Al Hindawi. Sector players say they should receive the same preferential price as that given to hotels, which currently stands at about 170 fils ($0.24).

The PHA has launched a project to establish a photovoltaic (PV) solar plant that will generate power for its members. According to a feasibility study, the plant could provide electricity at about 120 fils ($0.16) per KWh and could supply member hospitals with 70-80% of their needs. However, regulatory barriers are holding the project up. “Everything is in place but we have yet to receive final approval from the Ministry of Energy and Mineral Resources,” said Al Hindawi.

Medical Tourism

Jordan is the leading medical tourism destination in the Middle East in terms of visitor numbers. According to Al Hindawi, around 255,000 foreign patients came for treatment in 2013, up from 240,000 in 2012, when total revenues were $1bn and tourists accounted for about 23% of the patients treated in hospitals. Visitor numbers have been steadily growing from 180,000 in 2009, and Jordan recently was recognised as the “Best Medical Tourism Destination 2014” during the International Medical Tourism Journal travel awards ceremony. “Our thriving medical tourism segment is a direct consequence of King Hussein’s policies of educating our brightest minds abroad and establishing a strong culture of medicine at home,” Dr Hassib Sahyoun, CEO of Med Labs, told OBG.

Most medical tourists are from Arab countries such as Libya, Yemen, Sudan and Iraq. In recent years Libyans – whose numbers spiked following the country’s 2011 civil war – have led the field, constituting 30% of foreign patients. “Libyans have a long history of coming to Jordan for treatment and are likely to continue to do so for at least the next 10 years,” said Al Masalha.

The country is also popular as a medical tourism destination with Iraqis; however, getting visas is more difficult for them. “We have been lobbying for a relaxation of the visa requirements for a long time, but so far we have not seen any indication of change,” said Al Masalha. “Patients often want to bring their families but can rarely get visas to do so.” Hospitals also cite similar problems with visas for Sudanese patients.

According to the PHA, the leading fields of treatment for medical tourism include cardiovascular procedures, orthopaedics, cancer treatment, treatment for eye conditions and fertility treatment. Foreigners also come for transplants, provided they have a family donor in place. “Jordan is very advanced in areas such as cardiac, liver and kidney transplants, and the costs are much lower than those in the US and even in regional competitors such as Israel and Turkey,” said Al Hindawi. Another advantage is accreditation: 10 hospitals have international accreditation from the Joint Commission International, while 17, in addition to 42 primary health care centres and five breast imaging units, are locally accredited by the Health Care Accreditation Council.

“The Jordanian health sector is highly sophisticated compared to the rest of the region. It is comparable to international standards in many areas and is much cheaper,” said Dr Mazen Albashir, chairman and CEO of Istishari Hospital, adding that he believed Jordan could definitely become a medical tourism destination for Europeans – though the lack of a medical liability law negatively affects its ability to attract medical tourists.

The PHA is currently working on a strategy to boost medical tourist numbers to 280,000-300,000 by 2018. To achieve this it is targeting new markets, among them Algeria; Al Hindawi told OBG that the PHA hoped to sign an agreement with the Algerian Ministry of Labour to send patients to Jordan in second-half 2014. Speaking to OBG in April 2014, Dr Zuhair Abu Faris, president of the Jordan Hospitals Association (which represents state and private hospitals) said it was also targeting Algeria. “Algeria could be a major market. The Algerian government has a high opinion of health care in Jordan, and Algerians do not require a visa,” he told OBG.

Jordan currently faces relatively little competition from other Arab countries and has key advantages over competitors for Arab patients. “The health sector in the Gulf is expanding but so far it hasn’t posed a threat to Jordan,” said Haram. “The main competition for Jordan is Iran, India and Turkey, all of which attract a lot of Arab patients,” said Abu Faris. “However, Jordan has an advantage in terms of language and similar culture, and treatment is cheaper than in Turkey, for example.”

Dr Amid Abdelnour, CEO of Biolab, told OBG, “Jordanian health care is in a good place, but we will need to ramp up education and competitiveness again in order to remain ahead relative to the rest of the region.”

Hospitals are also looking further afield. “Nigeria is also a good market but obtaining visas is difficult,” said Al Hindawi. “The Commonwealth of Independent States also has potential as a result of our shared Islamic culture and the fact that many Jordanian doctors speak Russian. There are few direct flights but we are in discussions with airlines to launch weekly charter flights.”

Growth Areas

Most foreign patients come for non-elective treatments and operations; however, some elective procedures are growing in popularity. “Bariatric surgery is a growing market and is very successful,” said Sarhan. Dr Khaled Kaznakatbi, vice-chairman of the board of directors at Shmaisani Hospital, which carries out more bariatric surgical procedures than any other operation, told OBG it became popular three years ago and most patients come from the Gulf, especially Qatar. “The procedure is available in the Gulf, but treatment here is cheaper and service is better,” he told OBG.

Cosmetic surgery is also becoming more popular. Indeed, the owners of the private Eye Speciality Hospital are planning to open a new facility – to be known as Ishtar Hospital – within two to three years that will specialise in cosmetic surgery. Dr MS Noor, chairman of the board of directors at the hospital, told OBG that construction should begin in August or September 2014 at a cost of JD20m ($28.25m).

“Jordan cannot rival Lebanon for cosmetic surgery, as the field there is already very well established; however, Jordan has an advantage in that many patients come here for other forms of treatment, some of whom may decide to also undergo a cosmetic procedure during their stay,” Noor said. Stability is another important factor that enhances Jordan’s competitive edge.

Policy & Regulation

The HHC is responsible for designing health policy, while the MoH regulates, licenses and monitors institutions and professionals. One regulatory issue that private hospitals argue needs to be addressed is medical liability, for which there is currently no legislation. “Work on a draft law began around 10 years ago, but it has yet to be discussed by Parliament. The issue is very important, in particular as regards foreign patients, as some international insurers – especially those from the US, Europe and Russia – refuse to sign agreements with Jordanian hospitals because of the lack of a law,” said Al Masalha.

Workforce Issues

The sector benefits from the availability of well-trained physicians. “There is a strong pool of doctors in both the public and private sector,” said Haram. “Some of the medical schools here are very good; furthermore, many of the doctors that graduate from them tend to go to prestigious universities abroad for training, and most of them return to work in Jordan.” Private hospitals say they have few problems recruiting well-qualified doctors; however, MoH hospitals – which usually pay less – have shortages in some areas, in particular specialised forms of surgery, and Minister of Health Ali Hiasat in December 2013 said state-run hospitals were seeking an additional 600 physicians.

Another issue is a shortage of nurses. “Nurses tend to train in Jordan and then move to the Gulf, where they can command higher salaries,” said Haram. “The problem is getting worse as Jordan can’t compete on pay,” said Sarhan. The problem is particularly acute in the private sector. Hospitals were previously allowed to employ Filipino nurses; however, industry figures say this permission was withdrawn as a result of pressure from nursing unions. “We are trying to reach an agreement with the government to allow us to employ foreigners in 10% of nursing positions,” said Al Hindawi. The problem is exacerbated by the influx of Syrian refugees who are increasing demand on the sector.

Outlook

The prospects for bringing in more medical tourists from Western countries will depend in part on whether Jordan can pass a medical liability law, and reining in high costs will hinge on factors such as government approval for the establishment of the PHA’s planned PV plant. Nevertheless, the outlook for the sector appears strong and it is set to attract more investor interest. “Private hospitals in Jordan represent a golden investment opportunity because of factors such as the country’s growing population and the government’s lack of resources to build new hospitals,” said Noor.