Kuwait's healthcare sector has a major opportunity to reform and expand — developing its services to cater to a burgeoning population, at home and across the GCC. This signals an opportunity for investors, as well.
Since its establishment in the 1930s, Kuwait's healthcare sector has been moving forward steadily and has over time become a regulated sector through several reforms and initiatives implemented by the government. One of the key aspects driving health sector development is change in the country's demography. Kuwait's rapidly changing demographic currently holds a population of 4 million (made up of 67 percent non-nationals from 80 countries) with high life expectancy at birth of 78 for men and 79 for women, according to the World Health Organization. Improved lifestyle and higher birth rates and life expectancies are creating demand for hospitals, health centers, and maternity care, childcare, and care services for the elderly. According to the WHO, total spending on health per capita was $2,375 in 2013, or 2.9 percent of GDP for that year.
The growing population places pressure on the health service. In total, Kuwait is home to 2.9 million foreigners, mostly from India, Pakistan, Bangladesh, the Philippines, Egypt and Syria, in addition to 1.3 million native Kuwaitis. The country provides free medical services to citizens but expatriates must pay an annual fee of $165 each, besides paying reduced charges for some surgeries, certain treatments and procedures such as X-ray. The government of Kuwait is in the process of implementing a new health insurance system for expatriates that will be fully equipped with a strong and comprehensive provider network.
A major priority for the government is privatization of healthcare across the country. Central to this is its efforts to promote a health insurance that will cover all Kuwaitis, starting with the retired. Steps are therefore being taken to widen access to healthcare, and the government started a mega project by establishing the Kuwait Health Assurance Company (KHAC). The KHAC has a starting fund of KD230 million, which is being used to build 3 hospitals and 16 Primary Medical Centers that will have capacity to attend to more than 2 million expatriates residing in Kuwait under a government-sponsored medical insurance program. Kuwait's expatriate community will also be fully covered by the KHAC, with access to hospitals and across-the-board medical services. This helps the efforts the government is making to reduce the current overcrowding situation in the country's public hospitals.
In 2014, Kuwait announced a new investment plan worth $7 billion, to finance the construction of 10 new hospitals, adding 6,000 beds alongside a major upgrade of facilities nationwide. When this project is completed, the government estimates it will need an additional 15,000 healthcare professionals in the country. The plan sets out key targets to modernize the health infrastructure and laws to found the development projects, including the promotion of healthy lifestyle in order to adapt them to the needs of a growing population (1.7 percent per year). Almost 50 percent of the operating budget of the Ministry of Health is geared towards salaries and benefits. If the Compounded Annual Growth Rate (CAGR) stabilized at 7 percent, Kuwait's Ministry of Health operating budget would reach about KD 5 billion by 2030.
The new hospitals will be developed via a PPP with the KHAC, a partnership that is overseeing the expansion of the healthcare sector and the growing needs of Kuwait's people, both expatriate and native. KHAC will provide insurance to expatriates and provide services to insured members via the facilities it owns and manages.
A key partner from the private sector is the Gulf Insurance Group (GIG), whose subsidiary company, the Kuwait-based Gulf Insurance and Reinsurance Company, is working closely with the KHAC to roll out its investments and coverage.
The new facilities include 15 primary care centers. Currently, Kuwait has just 19 hospital beds per 10,000 people — a big shortfall but one that is being addressed. Obesity levels have reached 80 percent in women and 70 percent in men. Although the population is young, Kuwait is in the 13th position in the world for obesity and 7th for diabetes, according to the World Health Organization (WHO) reports. Almost 55 percent of Kuwaitis have higher than recommended levels of cholesterol. Official estimates from the WHO show that non-communicable diseases (NCDs) will constitute more than 60 percent of burden of disease in the Gulf region by 2020.
Although Kuwait's Ministry of Health is the owner, operator, and regulator of healthcare services and accounts for more than 80 percent of healthcare spending, many citizens are willing to get private treatment paying a bit more. The private sector is estimated to represent 15-20 percent of healthcare spending in coming years. In terms of amount expended in healthcare projects, the evolution moves from KD1.56 billion in 2014 to KD1.67 billion in 2015 — an increase of 6.9 percent.
The Kuwait Health Insurance Conference, held in May 2015, was a key opportunity for the government and the KHAC to promote the program for moving to a system of mandatory health insurance for every resident of Kuwait
According to recent reports on Medical Tourism, in Kuwait the total amount over one year (2014-15) for medical care overseas was about KD1 billion. The total of expenses for overseas treatment increased from KD155.2 million in 2013-14 to KD246.2 million in 2014-15 — representing a hike of 58.63 percent within a year. This service gives the possibility to send citizens abroad for treatments that are not available in Kuwait's hospitals. Currently, the main department responsible to manage this service is the Overseas Medical Treatment Department at Kuwait's Ministry of Health.
This has become one of the key planks of the Ministry of Health reforms. In 2014, Kuwait introduced measures that allow the ministry to manage and control levels of medical tourism with the aim of achieving a reduction of 50 percent. It drastically reduced the number of hospitals that state-aided tourists could use, and make it harder to go abroad for the treatment. From 2013 to 2014, the number of patients sent to London fell dramatically, from 1,100 to 500.
Regarding the pharmaceutical situation in the country, the preference for both, medical specialist and patients for branded products, allows the sector to be dominated by multinational drug makers. The 4Q2015 Pharmaceutical Risk/Reward Index ranks Kuwait at the position 53.7 out of 100. The country has dropped from its position as the third most attractive market in the region to the sixth most attractive, falling from a 3Q2015 score of 56.1. While the population is still adopting non-healthy ways of lifestyle, the levels of diabetes and also obesity will continue to increase each year. Increasing insurance coverage and rising income levels will lead to greater spending on diabetes, and commercial opportunities will be sought by multinational pharmaceutical companies and providers. According to official estimates, the spent in pharmaceutical sector grew from KD287 million in 2014 to KD300 million in 2015, an increase of 4.7 percent.
The potential for foreign companies to invest in Kuwait's health industry is huge. Those companies offering dental-lab equipment, pharmaceutical and hospital supplies, and specialized systems and technology have a great niche to keep an eye on. In addition, there is an increasing focus and demand for specialized services including laser, nanotechnology, and molecular medicine. Surgical instruments are also in high demand, as well as diagnostic or laboratory equipment in the fields of orthopedics, trauma care, ophthalmology, cardiology, oncology, radiology and radiotherapy, and healthcare information.
The challenge for the government is now to ensure that the high levels of PPP investment seen since 2013 are maintained if the goals for 2020 are to be realized. A key part of realizing universal (mandatory) coverage is through education. The new program, to be unrolled through 2016, seeks both to educate the population on the benefits of healthier lifestyles, and inform on the role of private health insurance in everyday life.
Dr. Mohammad H. Al-Mutairi
President, Kuwait Medical Association (KMA)