Title: Issues of asymmetric information in public-private partnership contracts within Jordanian healthcare sector

Authors: Abdelhafid Belarbi; Ghaleb A. El-Refae; Jamal Abu-Rashed

Addresses: College of Business Administration, AL Ain University of Science and Technology, P.O. Box 64141 Al Ain, UAE. ' College of Business Administration, AL Ain University of Science and Technology, P.O. Box 64141 Al Ain, UAE. ' College of Business, Northern Michigan University, 1401 Presque Isle Ave, Marquette, MI 49855, USA

Abstract: Public-private partnership (PPP) contract is a special type of governance. Under a PPP contract, a central-government agency or a local authority and a private agent bargain a long-term contractual agreement to build a public infrastructure or the providence of a public service, such that risks, returns and resources are optimally shared among partners. The health sector has applied such PPP schemes in the recent decades for two primary reasons: 1) lack of government budgetary support for the health sector and the search for an alternative source of funding 2) the emergence of privatisation in the health sector. However such schemes of contracts are fully related to issues of asymmetric information such as the problems of moral hazard, adverse selection and market for lemons. These problems undermine the shared optimal results of PPPs contracts. Jordanian Health sector has witnessed some healthcare cuts. The sector also endeavoured on such PPP contracts to lessen the deteriorating consequences of the health sector. This paper exposes the Jordanian experience of PPPs in the health sector. Related issues of asymmetric information are treated and some remedy propositions are advanced.

Keywords: public-private partnerships; PPP; asymmetric information problems; healthcare economics; moral hazard; adverse selection; principal-agent problem; contract theory; property rights; Jordan.

DOI: 10.1504/IJBHR.2012.045619

International Journal of Behavioural and Healthcare Research, 2012 Vol.3 No.1, pp.46 - 54

Published online: 24 Feb 2012 *

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