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Kuwait’s medical sector seeking more efficiency
October 24, 2015, 3:58 pm
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Changing demographics, evolving health care needs and growing pressures on the economy have convinced the government of the need to apportion its health care expenditure more effectively and efficiently.

With decreasing mortality rate, increasing life expectancy and a falling fertility rate that dropped from 4.1 children born per woman in 1985 to 2.6 children in 2015, the proportion of population above the age of 65 is projected to increase from the current 2.3 percent of the population to 16 percent by 2050.

Along with the increase in age dependency ratio, the nature of diseases affecting the population has also been shifting. As with many other countries, increasing prosperity in Kuwait has led to fall in communicable diseases but a huge increase in non-communicable diseases (NCD). The result has been a substantial growth in health care expenditure, which more than doubled from the US$2.28 billion in 2006 to $5.08 billion in 2013. Over 82 percent of this expenditure came from government spending.

Kuwait, which has 22 hospital beds per 10,000 head of population, spends significantly more on health care per capita than the regional average: $1507 in 2013 compared to $1279 in the GCC as a whole. The government plans to add 11,000 more beds in the coming years by investing around $4.3 billion in building new hospitals, clinics and upgrading existing ones.

The government also spends heavily on hiring medical staff from abroad. In 2012, there were 31,811 medical staff employed in the medical sector, of whom 5098, or around 16 percent, were Kuwaiti nationals while the remaining 84 percent were expatriate medical staff. The ratio is even greater among nursing staff, where only around 6 percent of the total 21,500 nurses were Kuwaitis.  The government has been offsetting the shortfall by hiring medical personnel from abroad, with a significant number of nurses being sourced from India and the Philippines.

However, with more than half the country’s GDP coming from hydrocarbon revenues, the recent fall in oil prices has led the government to re-think its priorities and expenditures. On the health front, the government is increasingly looking at private sector participation, not only in development of health infrastructure but also in delivering of health care, especially to its huge expatriate population.

The health care privatization program aims to principally decrease the government’s expenditure on delivering health care to the 2.9 million expatriates, who make up over 69 percent of the population. The private sector will be entrusted with the responsibility of providing health care to expatriates and their dependents. While expat accident and emergency cases, as well as those requiring tertiary care, will continue to be treated at public hospitals, the main services at these facilities will be set aside for citizens.

As part of this privatization initiative the government plans to launch a public-private-partnership company called the Kuwait Health Assurance Company (KHAC) with a paid-up capital of over $790 million. The new company, which will serve on the lines of a Health Maintenance Organization (HMO), will privatize expatriate health insurance and provide associated health care.

The government will hold a 24 percent stake in the company, through the Kuwait Investment Authority (19%) and the Public Institution for Social Security (5%), while a further 26 percent will be sold to an approved private consortium. The remaining 50 percent stake will be offered to the Kuwaiti public through an IPO on the Kuwait Stock Exchange. At the end of 2014, the government, through its Kuwait Clearing Company, distributed 50 percent of this capital in 1.15 million shares to every Kuwaiti national.

In its role as HMO, the newly formed KHAC is expected to construct three secondary-care hospitals and 12 primary care centers and employ over 8,000 personnel to cater to the health care needs of expatriates. Expatriates will be obliged to take out insurance with KHAC to meet the costs of their treatment, and will be obliged to use KHAC facilities as their first source for all medical needs. The annual insurance fees are likely to range from KD130 at the beginning to KD190 once the services become fully operational.

Despite its privatization initiatives, the government is expected to be the principal provider of health care for the foreseeable. As Kuwait shapes its health care policies for the future, it will need to pay more attention to expanding the capacity and quality of its health system, while encouraging private sector involvement and developing more sustainable health measures such as emphasizing preventive health and tackling non-communicable diseases among its citizens and expatriates alike.

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