Strategic Purchasing In Jordan's Health Sector

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Strategic Purchasing in Jordan’s Health SectorOpportunities for Impactful ChangeIntroductionStrategic purchasing is an institutional procurement process that continuously improves and re-evaluates thepurchasing activities of an organization. Organizations implement purchasing strategies to make cost effectivepurchasing decisions from a group of efficient vendors who will deliver quality goods or services on time andat mutually agreeable terms. "Strategic Purchasing” in the health sector, as per WHO definitions, means active,evidence-based engagement in defining the service-mix and volume and selecting the provider-mix tomaximize societal objectives. Improving the strategic purchasing of health services is central to improvinghealth system performance and making progress towards universal health coverage (UHC). In the context ofoverall heath finance it is a valuable tool that allows decision makers to have more options regarding spendingor allocation of resources. In making purchasing “strategic”, the public system is strengthened to have themechanisms to engage the private sector and the decision-making tools to analyze cost and efficiency anddetermine whether certain services or components can be more cost effectively delivered using outsourcedproviders. This is fundamental to developing an efficient and flexible health finance system.Strategic purchasing in health is a purposeful approach to use of available resources. The main benefits areto enhance equity in the distribution of resources, increase efficiency (“more health for the money”) or (“samehealth with less money”), manage expenditure growth and promote quality in health service delivery. It alsoserves to enhance transparency and accountability of providers and purchasers to the population. Thiscontributes to the ultimate goals of maximized health outcomes and equity in health gains, financial protectionand equity in financing as well as responsiveness.Strategic purchasing also includes an “active” emphasis on delivering results under a performance basedcontracting approach. Passive purchasing, which is currently the standard approach within the Jordanianhealth system, does not recognize the power of including additional performance measures and oversight ofcontractors to ensure quality and results. This shift from passive purchasing to active, performance-basedpurchasing is a major shift in approach for the Jordanian MOH.In the Jordanian context, the Health Finance and Governance Activity (HFG) undertook a high-level reviewof the process in the public health system and identified key areas that should be targeted for strategicpurchasing interventions. The following narrative describes key elements that need to be in place toeffectively establish strategic purchasing within the MOH system. This is followed by a review of theJordanian context and then by specific short-term recommendations that can be instrumental in establishingstrategic purchasing in Jordan.Jordanian Health System Challenges for Strategic PurchasingThis section presents and frames four key themes (drawn from WHO guidelines) that emerged as beingcritical for reforming strategic purchasing now in Jordan and strengthening this practice within the payorsystem. The four themes are:1) Governance including managing Alignment and Dynamics2) Quality Data and Information Management Systems.3) Benefit Package Design.4) Mixed Provider Payment Systems.1 / 25

Governance is an overarching health system function and is about “ensuring strategic policy frameworksexist and are combined with effective oversight, coalition-building, regulation, attention to system-design andaccountability”. It involves exercising authority, setting roles and responsibilities and shaping interactions ofthe different health actors, and in this context specifically of purchasers, providers, provider associations,society and beneficiaries. The effective exercise of governance is a critical enabler for strategic purchasing.A common challenge, especially in systems with multiple providers and payors such as in Jordan, isfragmentation and lack of coordination in the policymaking and oversight functions.Purchasers and providers need to be “governable” to enable strategic purchasing. Governability means theextent to which purchasers and providers can be steered to serve system-wide goals defined by healthpolicymakers. Three important factors affect “Governability” in the context of strategic purchasing:I.II.III.The purchasing agencies need to have a clear mandate for being a strategic purchaser based on legalprovisions that specify its powers, i.e. decision-making space as well as a sufficient level of autonomy.To respond to strategic purchasing signals, providers need an adequate level of autonomy whileconcurrently being held accountable to the purchasing agency.For a purchaser to be able to operate strategically, it needs to have purchasing & negotiation power tostimulate positive change across an entire health system. The size of the pooled funding matters for thepurchaser to have scope to influence the service delivery mode and provider performance. Fragmentationinto multiple schemes limits this purchasing power:It is important to realize that managing alignment of strategic purchasing with overall goals and allowing forthe strategic purchasing process to affect planning and strategy in a dynamic way is an essential outcome ofestablishing an effective strategic purchasing mechanism. This alignment and dynamic can be looked at asan independent theme for strategic purchasing. However, it is the result of establishing the capacity andlinking it to proper governance.When aligning strategic purchasing with other health financing functions, it is critical to plan and designstrategic purchasing reforms, taking into consideration current health financing system aspects. Strategicpurchasing design should not be done in isolation from public financial management rules and regulations.For this alignment to take place, a strong governance is needed for purchasing and overall for the wholehealth system. Strategic purchasing should be aligned with other health sector reforms and public financialmanagement and pooling.Managing the dynamics of strategic purchasing is a continuous process and challenge. Funding, treatmentoptions, technologies, and provider and user behaviour change over time. Therefore, its quite important toinstitutionalise a system review process to monitor all stakeholder reactions (i.e. providers, patients) onseveral areas such as benefit package, provider payment system, and provider responses to differentpayment-performance methods.Unfortunately, Jordan has many issues related to governance that impose significant obstacles to broadreforms aimed at promoting strategic purchasing: The public payors are not setup as true purchasers of services.There is a no mechanism for the public payors to cost or purchase services from public providers. Whilethere is a general periodic reconciliation of accounts this is not based on services delivered nor is it basedon an understanding of actual cost or using a negotiated payment system.The MOH is doing multiple roles, acting as a purchaser, provider, and a regulator. This constitutes differentgovernance problems and causes conflict of interest.There are multiple insurance funds, therefore, weakening the revenue pooling, and the ability of thepurchaser to negotiate better prices.There is no single legal entity that consolidates all funds and is mandated with the task of revenue poolingand purchasing. The health system currently has multiple entities such as the CIP fund and the RMS fund.This of course defeats the notion of “Economies of Scale” to enable a better bargaining power.There are no clearly defined roles and responsibilities or a charter that defines the relationship betweenpayer, provider, and regulator.2 / 25

Quality data and adequate information management systemsare a criticalcomponent of any system with a strong strategic purchasing capacity. In order to effectively trackexpenditures, link performance to payment, and better manage care under a benefit package, the Ministry ofHealth and payors must be able to rely on accurate information to guide decisions. For the payor, the ability tofully document the patient experience is essential for proper billing and cost control. At a higher level,information about population need, service utilization, and outcomes will have a major impact on strategicpurchasing decisions and provider selection.Provider payment systems demand better data that in turn can stimulate improvement in information systems.Nevertheless, in the Jordanian context, there are several challenges related to data and managementinformation systems. Below are some of the key challenges: There isn’t a comprehensive performance management information system in place yet. Different KPIsare needed at an entity level whether at primary healthcare facility or secondary healthcare facility. Theseregularly and frequently monitored KPIs at an entity level, allows the purchaser to assess the performanceof the entity, and accordingly base payments relative to performance.Due to the complexity of data gathering and the large number of facilities (i.e. Roughly 700 PHC centresin Jordan) automation and technology is of paramount importance to reduce manual work, errors inreporting and overall human error. Hakeem should be a solution to this challenge, yet it is not yetimplemented and scaled at a national level covering all entities.There must be adequate training for the users of the performance management system. Filling ofinformation and subsequently making decisions based on information requires training and capacitybuilding.Benefit Package Designrefers to those services that are to be paid, in part or in full, by thepurchaser from pooled funds. The benefit package can be understood as a guarantee to deliver in full theservices to which beneficiaries have been entitled and “promised”. It is important for purchasers and providersto understand the benefits package and how this will be costed and delivered to the population and it is equallyimportant for the population to understand their rights and responsibilities regarding health service use.Benefit package design is related to the three health financing functions: how much money can be expected(revenue raising), how much of this money will be pooled for purposes of supporting the benefit package(pooling), and what mechanisms will be used to pay for the services in the benefit package (purchasing). Assuch, it is important to approach benefit package design as one interdependent part of health financing policythat needs to be aligned with other parts of the system, particularly purchasing.Key challenges emerge when discussing benefit package design. Mainly: Deciding what is included and what’s not included in the benefit package.Costing of the benefit package based on sound rationale costing method.Creating a system that regularly monitors and reviews the benefit package cost and components.These challenges can be overcome by creating a methodology to assess and design the benefit packagebased on population needs and then reaching a proper costing. The costing exercise should enable a biggerpool of insured citizens. Understanding the unit cost of the “benefit package” will help in deciding the totalamount of revenue raising needed.Mixed Provider Payment Systems is common in many countries. In many countries line-itembudgets to government providers co-exist with other payment methods. With this perspective, the question isno longer how to optimize a specific performance-based financing program, but how to align it with the overallprovider payment system including a defined benefits package.Under a mixed payment system, it is often difficult to unify payments around a common theme includingperformance based contracting approaches or a common benefit package. Costing and negotiation ofpayment is also challenging. It is therefore essential that unification of payment methods be a focus for reformsthat will allow the system to effectively implement performance-based financing and contracting around adefined benefits package that is equitable and affordable and meets the needs of the population.3 / 25

As mentioned previously Jordan has a fragmented public payor system with much of the cost for health carebeing subsidized by the government through its current public insurance system under either the CivilInsurance Program, managed by the Health Insurance Administration and the MOH or through the MilitaryInsurance Fund managed by the Royal Medical Services under the Ministry of Defence. There are other partialsubsidized programs offered through several major universities.Jordan faces different challenges when it comes to mixed provider payment systems, such as:I.II.III.Moving away from budget line item payment to performance and output-based payment.Using performance-based payment to alter and change traffic from secondary towards primaryfacilities.Unification of performance-compensation systems in the public sector. Having one agreed uponsystem with clear contracts/SLAs reduces complexity and helps in clarifying the relationship betweena provide and payer.Why Strategic Purchasing is Important for PHCThe Jordanian health system is complex and fragmented. Addressing the deficiencies described above willhelp develop a strong package of interventions that will promote strategic purchasing and establish the basicmechanisms that can enable this. The most critical involve reforming the contracting and service purchasingfunctions with the public system. In conjunction with these systems reforms, HFG has reviewed the servicedelivery system and identified the primary health care sector as being particularly suitable for the introductionof strategic purchasing which could result in considerable cost savings. A recent study (Attachment 1)completed by HFG on a small sample of MOH primary health care clinics and centers has revealed hugedifferences in average cost per visit between similar service sites (Table 1). For example, a simplecomparison of two comprehensive centers show reasonably similar cost per visit while comparing PHCcenters shows a variation from 5.4 to 15.8 JD. There are also discrepancies in the distribution of clinics andcenters that do not appear to relate to population catchment or health needs (Table 2) with population perhealth center ranging from approximately 5,000 people to well over 110,000. Both of these analyses showsignificant disconnect between population needs and service provision. HFG is performing a broader studyto map the relative cost per case across most PHC service sites in Jordan and will correlate this with qualityindicators to better define a national profile of PHC utilization and service provision.Table 1: Total cost per visit comparison of select facilities#Expenditure haibeh Al-Health CenterHealth CenterSharqyeh PrimaryHealth CenterMarsa' PrimaryHealth CenterShafa BadranAbu NusairPrimary HealthPrimary 4Cleaning 32,5003,2503,8507,3184,5316Security Landline215810Total cost per visit4.511Payroll per visit4.03.510.14.38.813.112Contracted Services per visits0.30.52.00.80.91.9Table 2: Total number of health centers per governorate and per populationHealth ensiveHealth CentersPrimaryHealthCentersBranch Health Total Number ofCentersHealth centersAvg Population/Health Center4 / 25

Amman governorateMarka District1,008,40031011472,029Amman QasabahDistrict902,77041602045,139Al- Jamaah District784,6703227112,096Na'oor District136,7402651310,518Jizah District124,46021311264,787Muaqqar District88,980165127,415Jarash governorateJarash QasabehDistrict250,000317626* Estimated Population of the Kingdom by Governorate, Locality, Sex and Household, 2017- Department of Statistics-Jordan**Health Centers numbers from the Jordan MOH website.9,615According to the World Health Organization, PHC can meet 80-90% of an individual’s health needs over thecourse of their life. A health system with strong PHC as its core delivers better health outcomes, efficiency andimproved quality of care compared to other models. Health systems with strong PHC shortens the gap toachieve universal health coverage.Primary health care is considered the first defence gate against NCDs. NCDs are considered a threat not justin the Jordanian context but also at a global level. First, 40M NCD Global deaths were reported in 2015 out ofa total of 56M deaths. Second, 48% of NCD deaths in low- and middle-income countries in 2015 occurredbefore the age of 70. Third, 80% of premature heart disease, stroke and diabetes can be prevented, as perWHO Risk Factors.Noncommunicable diseases (NCDs), such as heart disease, stroke, cancer, chronic respiratory diseases anddiabetes, are the leading cause of mortality in the world. This epidemic is an under-appreciated cause ofpoverty and hampers the economic development of many countries. The burden is growing - the number ofpeople, families and communities afflicted is increasing. Common, modifiable risk factors underlie the majorNCDs. They include tobacco, harmful use of alcohol, unhealthy diet, insufficient physical activity,overweight/obesity, raised blood pressure, raised blood sugar and raised cholesterol. Solutions to NCDs arehighly cost-effective. Comprehensive and integrated action at the national level, led by committed governmentsand decision makers, is key to achieve success. Based on WHO data, Jordan is among those countries withhigher than average NCD mortality (613.7 NCD Mortality per 100K population versus an average of 490 acrossdeveloped countries), therefore, focusing on strategic purchasing to enable a more resilient PHC system iskey to control of NCDs.Because of its broad importance in managing a populations health including prevention and early detection ofdisease and management of NCDs, PHC is the core for a strong health system. Based on our initial findingsrelated to efficiency and utilization in the Jordanian system, PHC is a potentially important area to focusstrategic purchasing interventions and is a critical service delivery point. In addition, finding savings in the totalcost for PHC through a strategic purchasing approach can release funds that can be used to support improvedmanagement of non-communicable diseases and further reduce the overall financial burden on the system.A Coordinated Approach to Promote Strategic PurchasingJordan, just as any country, faces different opportunities and challenges when it comes to revamping itshealthcare system. Below are highlighted the relevant factors that can be targeted to promote strategicpurchasing in Jordan with a focus on primary health care: Governance. A strong strategic purchasing function needs to be backed up by effective healthcaregovernance. In Jordan, there are significant governance challenges related to strategic purchasing. Forexample, the MOH is regulator, purchaser and provider. Therefore, there is a lack of separation ofresponsibilities with no clear relationships between different functions. This makes governance achallenge, and accordingly weakens any future effort to establish an efficient strategic purchasing function.The ultimate solution would be in the phased restructuring of the current health system, to separate rolesand responsibilities and to create clear accountabilities. The Payer should be an independent entity with5 / 25

a clear mandate to pool revenue and then strategically purchase based on clear performance criteria. Theprovider should have authority to manage their budgets and improve their performance. A benefit packageneeds to be designed and costed, so that the payer would know what they’re buying and how much itcosts.Information Systems. One of the key principles of strategic purchasing is the notion of linkingperformance to compensation. In other words, you get paid well if you do a better job. This requiresmeasurement of performance, which currently is not happening at a granular provider level. An effectiveinformation management system needs to be in place to build data and trends on performance. The firststep in the right direction is the Performance Management Information System currently beingimplemented by the MOH with the support of USAID through its HFG activity, as it has the potential ofcapturing KPIs at an entity level, measuring performance, which could be linked to compensation levels.Primary Healthcare. PHC faces several challenges in Jordan. First, there are too many clinics in Jordan,not necessarily distributed geographically in an optimal way. This requires a footprint optimisation exerciseto determine the needed number of clinics and their best location. Second, there is a shortage of familymedicine doctors. The system currently encourages specialisation, and not the production of GPs. Third,it is common to bypass PHC and go to the hospital directly. This of course raises the cost of treatmentunnecessarily since secondary care is more expensive than primary. Lastly, there is no system to measurethe performance of PHC and accordingly compensate and pay physicians according to their performanceand health outcomes.Capability in Strategic Purchasing. Strategic purchasing requires a complex set of skills and capabilitiessuch as financial management, negotiation skills, and human resource management. These skills enablethe right design and implementation of a strategic purchasing function. We believe these are areas thatthe Jordanian government needs to work on, to build the necessary capacity to run a strategic purchasingfunction.Resource Allocation. In Jordan, resources are limited. When it comes to healthcare, the government isspending capital on building new infrastructure (Hospitals and Clinics). One way to overcome budgetchallenges is PPP (Public Private Partnerships) or “Strategic Purchasing”. Instead of building new clinicsand facilities, the Jordanian government could outsource to the private sector clinics, and therefore avoidexpensive financial capital commitments. Strategic purchasing would evaluate the right collaborations andthe mix between in-house vs. out-sourced services.Contracts, SLAs and Performance Monitoring. In the Jordanian context, there needs to be a morerigorous design of health contracts and SLAs, followed by continuous monitoring of performance of a thirdparty. Recently, Al-Basheer Hospital, was accused of paying money to a third-party service provider forseveral years, yet the staff of the third party did not attend to work for long periods of time. This madenews in the local media and newspapers. Such incidents are due to lack of SLAs (Service LevelAgreements) and lack of follow up on progress and work done by the third party.Public Private Partnerships (PPPs): although the government does contract with the private sector onsome healthcare services and other non-medical services, it is not yet done on a formal large scale. Forexample, the number of public PHC centres is around 700 units and still the public sector does factorcapital expenditures as part of the yearly budget exercise for the building of new health facilities. Webelieve a more innovative collaboration between public and private could result in a win-win situation. Forexample, by transferring those who have public insurance to private clinics, this would reduce the pressureon the public sector to build new facilities, while the private sector would benefit from the revenue fromincreased patient traffic.Short-term Interventional Areas Supporting Improved Strategic PurchasingIn support of improving the broad areas identified above, HFG will focus its efforts on the following specificproject activities:1. Support HIA as a model public payor: HIA oversees the CIP which is the largest pool of publicfunds directed toward health insurance in Jordan. While it is important to move toward a unifiedapproach to pooling and revenue generation and strategic purchasing, it is also important to focus oninterventions that are practical and can promote change with minimal disruption to the system. HIAcan become the main public insurance provider in Jordan and with an investment in systems andoperations can serve as a model for the main payor. HFG is currently supporting operationalimprovements in HIA and this work will synergize well with the development of strategic purchasingcapacity. HFG is also working with HIA to develop an Essential Benefits Package for costing as theprimary product of the CIP. Together these interventions can establish HIA as a model from whichthe public system can learn and grow.6 / 25

2. Support Performance-Based Contracting within HIA: HFG is supporting performance-basedcontracting within HIA. This is a critical component and is essential for strategic purchasing. Thisactivity will be expanded as needed to include critical contract provisions and management oversightas may be needed for strategic purchasing.3. Support development of an EHP within HIA: HFG will support the development of an EssentialHealth Package for the MOH and other stakeholders that will be introduced with HIA as part of thereforms that are progressing regarding performance-based contracting. The focus of the EHP will bemostly PHC and will be suitable with minimal adjustment for strategic purchasing at the PHC level.4. Build evidence base for PHC strategic purchasing: HFG will work with the MOH to further analyzePHC service distribution and cost as a follow-up to our initial work described in Attachment 1. Inaddition to helping the MOH/HIA develop a mechanism for strategic purchasing, it is essential thatdecision makers are provided the tools and evidence to make sound purchasing decisions. Theexpansion of this study and linking to quality indicators will highlight specific areas that can benefitfrom shifting service provision to the private sector using strategic purchasing principles.5. Identify PHC networks to target as pilots for strategic purchasing and private sectorengagement: As a result of the studies and analysis described above, MOH supported by HFG willidentify several PHC center/clinic networks that can benefit from the application of strategic purchasingand support the MOH in rolling out this new method in these selected model networks. For example,this method would allow the MOH to shift to a public-private partnership model in certain areas ornetworks based on utilization and cost with the goal of reducing MOH presence and increasing privatesector contracting on a fee for service or capitated basis.7 / 25

ATTACHMENT 1:Health Finance and Governance ActivityPrimary Healthcare ReportAssessment of Supply and Demand DriversNovember 20188 / 25

ACKNOWLEDGMENTSThis report was closely prepared in collaboration with the MOH PHC Directorate and central and governorate staff.The USAID Health Finance and Governance Activity thanks Dr. Ayyoub Al Sayaydeh, the Assistant SecretaryGeneral for Primary Health Care at the Ministry of Health for his technical input and contributions.9 / 25

I.Executive SummaryRecently, the Inter-Ministerial Committee for Health Sector Reform declared PHC as the top priority forhealth sector reform. Jordan’s Health Sector Reform Action Plan 2018-2022 emphasizes the best utilizationof PHC services. Planners foresee the need to improve the quality and safety of health care services andensure their sustainability; to improve monitoring and controlling communicable diseases; to reduce theprevalence of non-communicable diseases; to enhance reproductive health and child services; to enhance thehealth of school students and the school environment; and to strengthen environmental and vocationalsanitation. All these objectives are strongly enabled by cost effective primary care.Jordan faces familiar and systemic PHC constraints. Based on the National Health Accounts, NHA 2015,only 18% of the total health expenditure (THE) was spent on primary health care, compared with 74% oncurative care.Most Jordanian citizens prefer to bypass primary care in favour of ambulatory care at secondary/tertiary carefacilities. The growing non-communicable disease burden requires a reorientation of the system towardspreventive and primary care to reduce an expensive curative caseload in the future.Primary health care is the first point of contact between a community and its country’s health system. TheWorld Bank estimates that 90% of all health needs can be met at the primary health care level. Investment inprimary health care is a cost-effective investment for UHC – it helps reduce the need for more costly,complex care by preventing illness and promoting general health. Investing to build quality, accessible andequitable primary health care services is the most practical, efficient and effective first step for countriesworking to deliver UHC.This report provides a qualitative and quantitative perspective on PHC. It provides a quick and strategic viewon the key issues facing PHC in Jordan. The report is valuable for a decision maker or a change leader, as itprovides the necessary proof, that change in the PHC system is needed to achieve the right and neededefficiency. The report evaluates several factors such as utilization rates in PHC centers, distribution of PHCcenters, and patient’s choice. A sample of PHC centers were selected to demonstrate several potentialimprovements on cost, utilization, distribution and overall system design

Strategic Purchasing in Jordan's Health Sector Opportunities for Impactful Change . overall heath finance it is a valuable tool that allows decision makers to have more options regarding spending or allocation of resources. In making purchasing "strategic", the public system is strengthened to have the .

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