The health care industry has moved front and centre of the development agenda throughout the Gulf and wider Middle Eastern region. The industry’s resilience to the effects of the global economic crisis over the past two years has whetted the appetite of private investors, while governments are concerned about growing demographic pressure on social services.
This situation should provide ample opportunity for health care providers over the coming decade. According to a recent report by McKinsey & Company, the GCC will require a two-fold increase in the number of hospital beds over the next two decades, with this spurred by a 240% rise in demand for treatment. The region also has the highest per capita incidence of lifestyle-related disease in the world, a fact that is likely to lead to pressure on the supply of specialist facilities and hospitals.
Kuwait is no different in this regard. The country has relatively strong basic health care indicators, but there is increasing pressure on its facilities. The country currently has 19 hospital beds per 10,000 people, compared to 22 in Saudi Arabia, 39 in the UK and 140 in Japan. Although the country’s population tends to be quite young on average, and thus requires less health care than an ageing nation like Japan, this undersupply could become a more serious concern over time, particularly given its population growth rate, which the World Bank puts at 2.4%. This will also be compounded by a growing disease burden. Obesity levels, for example, have reached 80.4% for women and 69.5% for men, according to the Kuwait National Development Society.
Despite its declared commitment to social services, spending on health care is relatively low by regional standards. In 2007, the latest year for which comparative figures are available, Kuwaiti spending on health care totalled 1.7% of GDP, compared to 2.7% in the UAE, 3.4% in Saudi Arabia and 8.9% in Jordan. Nonetheless, the government has demonstrated a growing awareness of the need to address this issue.
Kuwait signalled its early intent to remedy shortcomings in its health care provision when the industry was touted as a main beneficiary of the $108bn development plan in February 2010. In January 2011, it was announced that the government is working on a strategy to bolster health care facilities with an additional 3500 beds, as well as new laboratories and surgical suites. Following the announcement, the Ministry of Health’s undersecretary for engineering affairs, Samir Al Asfour, stressed that the private sector will be instrumental in the execution of this strategy and the development of the sector.
While these plans are in their infancy, it seems clear that investment in the sector will increase steadily over the coming years. Business Monitor International (BMI) predicts that the sector will expand at a compound annual growth rate of 8.47% between 2009 and 2014, to reach KD1.37bn ($4.9bn). It is estimated that public sector expenditure will constitute almost 75% of this total. Pharmaceutical spending is expected to hit KD143m ($513.4m) by 2014, up from KD106m ($380.5m) in 2009.
These funds will undoubtedly have an impact on the sector, but how new development will be fulfilled and services provided remains a matter of debate. Kuwait has long offered its citizens an expansive cradle-to-grave welfare system that has involved the dispersal of the nation’s oil wealth through a number of free services. Mindful of the rising costs, the government is now trying to become more market-orientated, a strategy that is particularly contentious in the provision of social services.
The government has been moving towards implementing a comprehensive health insurance scheme, despite criticism from some opposition circles. In 2010, the government drafted two bills for comprehensive health insurance for Kuwaiti nationals and the establishment of an independent health authority to regulate the system. Under the proposals, the government would pay health insurance fees for citizens, while additional optional services must be met through out-of-pocket expenses. This free insurance would also partially cover overseas treatment for Kuwaiti citizens.
The government hopes that such proposals, which are yet to be put before parliament, will dramatically improve the level of care and reduce the outsized bill for overseas treatment. They will also lead to significant private investment opportunities in the country.
Yet criticism of the plan continues to be voiced. According to Nadeem Al Duaij, chairman of the Kuwait Health Initiative, a non-profit health policy group, “[for-profit insurance] has time and again resulted in poor health outcomes, in inequalities in health care access and delivery, and in an inability to contain rising health care costs. We believe in the need for health insurance to protect the individual from catastrophic health expenditures but this must be done through the adoption of a non-profit social health insurance or similar scheme that is supported by current health policy evidence.”
Despite such divided opinion, all sides agree that Kuwait’s health system needs prompt attention. As such, with government attention now focused firmly on the sector and increasing funding flowing towards it, the next 12 months could be a crucial time for the country’s health care industry.