Kuwait: Health care privatisation moves ahead

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Ambitious plans to privatise segments of Kuwait’s health care services are gaining momentum as the government makes a two-fold bid to reduce waiting times at state hospitals and attract new investment for the sector.

The Kuwait government has already taken action to boost private sector participation under its wide-ranging $110bn development plan by setting up public-private partnerships (PPPs) that will roll out several major projects.

While a lack of external investment has hindered previous attempts to galvanise health care privatisation, the administration’s latest initiatives look set to generate considerably more interest among businesses.

One of the government’s priorities is the privatisation of health care services for Kuwait’s sizeable population of expatriate workers. The initiative has been on the administration’s agenda since legislation passed in 2010 enabled the state to begin privatising sectors of the economy.

Expatriate workers account for two thirds of Kuwait’s 2.82m population, according to local media. The government currently provides nationals with free health care, while foreign workers make an annual payment of $175 that can rise if additional services, such as X-rays, are required.

In March, the Ministry of Health approved a proposal that will overhaul access to public medical care by allotting nationals and expatriates separate times for hospital visits.

Jahra Hospital, west of Kuwait City, began trialling the new system in mid-July for a six-month period. Under the pilot, Kuwaitis are given access to state hospitals in the mornings, while expatriates have been allocated the afternoons. Exceptions will be made for emergency cases. The programme is expected to be rolled out across all public health care facilities, pending the outcome of a review at the end of the trial.

Kuwait’s 2010 privatisation law forms a key component of the country’s four-year $107.3bn development plan, which is aimed at reducing oil dependence and boosting the private sector. Reforms have enabled the administration to establish several ambitious PPPs, including a venture for the construction of a 500-bed hospital near Al Andalus. The government is keen to boost the number of beds available for patients by adding to the country’s 20 public and 21 private hospitals.

In September 2012, the names of the companies that can be considered for the project were made public. Carillion, Habtoor Leighton Group, Al Ghanim International, and a consortium of companies including Bouygues Batiment International, Ahmadiah Trading & Contracting, EDTE, Gulf Investment Corporation, Infrastructure Holding Company and Mubadala Infrastructure Partners, were among the names appearing on the list. The government’s Partnerships Technical Bureau expects a decision on the project to be made by the end of the year.

The setting up the Kuwait Health Assurance Company (KHAC), an expansive PPP operating under the Ministry of Health, is also expected to speed up sectoral reform. The company, which was launched in 2011 as part of the government’s bid to accelerate privatisation across the sector, is set to roll out more than 800 health care projects, including three hospitals and 15 primary health care clinics by 2015. Ownership will be divided among private investors (26%), the government (24%) and free-float Kuwaiti shareholders (50%).

Once fully operational, the KHAC’s core activity will be the provision of health care coverage to most expatriates. The company will deliver services at pre-set prices similar to the processes used by US health maintenance organisations. It will also provide health insurance to 60% of the country’s expatriates. With an expected capital base of KD318m ($1.1bn), and an anticipated workforce of 8400 full-time employees, the company could well become one of the largest organisations in its field across the Middle East.

However, moving the project forward has not been straightforward for the Kuwaiti government. The first round of tendering for private investors in 2011 produced only one bidder, Agility Logistics, prompting the government to put the project out again in April 2013.

Results from the second round of bidding were more positive. In early July, investment group Kuwait Projects Company (KIPCO) announced it would bid for a KD25.6m ($89.62m) stake in KHAC, joining Agility and other bidders, which include National Real Interest Estate, Arabi Holding Group, Yiaco Medical Company, Jiblah Holding and Al Essa Medical Equipment.

Although Kuwait has encountered challenges to its health care privatisation plans, the latest round of KHAC bidding suggests that the private sector is beginning to recognise the opportunities emerging within the sector. New facilities, which will be rolled out across the state by PPPs, should ease the longstanding burden on public health facilities and open the door for investors and insurance companies, setting the scene for the sector to expand.

 

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