Economic Update

Published 25 Oct 2017

As part of the New Kuwait 2035 development strategy unveiled in January, cost-cutting measures have begun to take hold in the health sector.

Last month the Ministry of Health (MoH) rolled back expatriate subsidies, with public hospitals and polyclinics now charging KD5 ($17) for a visit to the emergency room, KD10 ($33) for an outpatient visit, KD10 ($33) per day for inpatients, KD30 ($99) per day for intensive care unit stays and KD50 ($166) per day for a private room in a public hospital. Employers, meanwhile, will continue to pay around KD50 ($166) in annual insurance premiums on their employees’ behalf.

Low-income earners, which comprise the majority of the expatriate population, previously paid KD1 ($3.30) to see a doctor at a public hospital.

The government’s New Kuwait 2035 development strategy has specifically targeted health care reforms as one of seven key areas for reform over the next two decades, emphasising quality and cost-effective service improvements to reduce wait times.

Demographic and lifestyle changes pose challenges

Rapid population growth, shifting demographics and rising incidence of non-communicable diseases (NCDs) have placed additional capacity constraints on Kuwait’s public health care system.

The state’s population has nearly doubled since the start of the century, rising from 2m to 4m last year, according to World Bank data. Although two-thirds of the population is between 15 and 49 years old, an estimated 600,000 people will turn 50 over the next decade.

This demographic shift is set to exacerbate existing fiscal pressures across the public health care system, which is already struggling to manage the rising occurrence of illnesses common to high-income countries, such as cardiovascular disease and diabetes. In March the World Health Organisation reported that NCDs account for 73% of all deaths in Kuwait.

Public expenditure on health care has therefore spiked in recent decades, rising from 76% of total health spending in 2000 to a high of 87.1% in 2009 and 85.9% in 2014, the most recent year for which statistics are available. Total health care outlays reached $5.2bn that same year and under current demographic trends is expected to record a compound annual growth rate of 7.5% between 2015 and 2020 to hit $8bn. Medical service and product prices, meanwhile, have also risen, increasing by 8% in 2015 and 8.4% in 2016, according to data from US-based consultancy Aon Hewitt.

The public system is already showing signs of strain, and in February overcrowding led some hospitals to halt services for expatriates. Fiscal pressures are also a concern, with local media reporting in June that budgetary constraints at the MoH led to funding shortfalls for evening clinics.

Infrastructure investments aimed at reducing overcrowding

New Kuwait’s health care pillar emphasises increasing capacity at public hospitals, with major improvements expected following the completion of eight hospital projects, including the Amiri Hospital, Al Sabah Hospital, Kuwait Police Hospital, Ibn Sina Hospital, and new maternity and children’s hospitals.

According to the government, the 446-bed Amiri and 771-bed Al Sabah hospitals are expected to become operational before 2020.

Hospital builds offer new opportunities to private stakeholders, and represent the largest construction industry growth driver, accounting for six of the state’s top-10 construction projects by value, worth an estimated $5.5bn as of September 2016, according to industry media. 

Contract awards for upcoming projects are ongoing: in February a joint venture between Abu Dhabi-based design firm SSH and Italy’s Studio Altieri was awarded an $817m main design consultancy contract for the Kuwait New Maternity Hospital, which will offer 27 operating rooms and 780 inpatient beds upon completion. One month earlier, SSH was also awarded a design contract for a 792-bed children’s hospital planned for development in the Al Sabah Specialty Medical Area in Kuwait City.

Upcoming projects slated to become operational after 2020 include the KD100m ($331.1m), 296-bed Ibn Sina Hospital in 2021, and the 600- to 750-bed, KD250m ($837.8m) Physical Medicine and Rehabilitation Hospital in Al Andalus in 2023.

In addition to offering a major boost to construction growth over the coming decade, these projects should help the state significantly reduce wait times at its public health facilities, leaving it well positioned to achieve its 2035 development targets.