Public hospitals “charge” tax payers as much as top private hospitals. Due to lack of competition, they are far less accountable. ...
Public
hospitals “charge” tax payers as much as top private hospitals. Due to lack of
competition, they are far less accountable.
I
am an eye witness to this real story. A terminally ill cancer patient was
admitted to a top rated private hospital in Amman. The room was sparkling
clean, the furniture top notch and the nursing staff fully attentive, with
round the clock attendance to the patient. The panel of specialist doctors
decided that the patient cannot be treated and was in her final days, 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 family faced the massive contrast in nursing care
between the private and government hospitals. Nurses at the government hospital
never visited the room for regular checks, they came only when urged to come.
They never administered the medicine: They insisted that each patient’s family
companion should administer the medicine to their patient by themselves! Same
applied to nasal feeding, and helping in personal hygiene of the patient. The
family eventually had to hire a professional nurse, at their own expense, to
help them since the nursing staff at the government hospital were quite
useless.
Yet
government hospitals are indeed very well funded. The Ministry of Health public
hospitals across Jordan had 4468 beds in 2013. Their operational budget
amounted to 283 million JDs and the budget for capital expenditure totaled 111
million JDs in 2013 resulting in the total budget for government hospitals
reaching 394 million JDs.
In
2013, government hospitals admitted 347,929 patients who 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%. The average operational cost of
treating each patient at a government hospital thus amounted to 256 JDs per day
(356 JDs per day when CAPEX budget is taken into account).
How
does this compare to private hospital costs? Two private hospitals – publicly
traded at the ASE – offer insights. One has 200 beds and the second has 220
beds. Both generated combined revenues of 32.2 million JDs in 2013, of which
around 5 million JDs was operational profit. Conservatively, assuming a bed
utilization rate 10% lower than average government hospitals (i.e. 61%), the
two private hospitals charged 336 JDs per patient per night. Their costs stood
at 284 JDs 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 303
JDs. And costs drop to 255 JDs per patient per night.
In
summary, government hospitals across Jordan collected 356 JDs per patient per
day in 2013. In the same year, profit seeking private hospitals in Amman
charged 303 JDs per patient per night, 15% 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.
The
conclusions readily lend themselves:
-
Government health care is far from “free”. It is as expensive as care in
state-of-the-art private hospitals in Amman.
-
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. Because choice and competition exist for consumers of
private health care services.
-
The main difference is not public sector management vs. private sector
management. Rather the difference is lack of competition for government
hospitals which makes them far less accountable than private ones. Patients in government
hospitals do not have a choice, and the government hospital is guaranteed its
operating budget every year regardless of its level of service. There is 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 are offering a free service to the
patients, and so long as patients in government hospitals believe they are
getting free health care, government hospitals will remain unaccountable and
will not offer cost effective nor excellent care.
Health
Policies in Jordan should 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 coverage much needed choice – by offering them the option of
choosing the hospital with a cap on expenses- would help massively as well.
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