The government is making strategic policy adjustments to stay ahead of trends in health care

As with many developed countries, the health challenges that Kuwait is likely to face over the next few years are different than those it has dealt with in the past. To overcome these new circumstances, the government is looking to restructure the sector to make it more responsive to current and future needs, and especially to encourage more participation by the private sector.

Historical Background

In 1912, American missionaries established a clinic in Kuwait at the behest of the then-ruler, Sheikh Mubarak Al Sabah. By 1920, they had started to run hospital-style facilities, and in 1934, opened the Olcott Hospital, with 34 beds. Two years later, the Kuwaiti authorities set up the department that would eventually become the Ministry of Health (MoH). After oil was discovered in Kuwait in 1938, new revenues allowed the health care system to expand rapidly. In 1949 the first state hospital, Amiri, opened with 45 beds, and in 1961, following independence from the UK, the government initiated a comprehensive service providing free health care to all citizens.

Demographics

The population of Kuwait can be divided into two main groups: Kuwaiti nationals, and expatriate workers and their children. As of the latest figures, compiled year-end 2013, the Public Authority for Civil Information estimates that there were about 1.24m nationals and 2.72m expatriates, yielding a total population of almost 4m. Both groups have a young demographic profile. Regarding nationals, this is the result of consistently high birth rates; for expatriates, it is because the chief group coming to Kuwait consists of younger workers. The average Kuwaiti woman gave birth to 2.7 children over her lifetime, according to the World Bank in 2012. In terms of demographics, some 21% of the entire population were below the age of 15, while just 3.6% were over 65. For Kuwaitis, 42% are under the age of 15 and an estimated 50% under the age of 20. Given that the majority of expats tend to retire in their countries of origin, and that many are either single or have their families back home, the bulk of expatriates in Kuwait are likely to be people of working age.

Regulation

The MoH is both the principal provider of health care in Kuwait and the sector’s overseer and regulator. According to Central Statistical Bureau figures, it operated 94 primary care institutions (health centres and clinics providing general-practitioner services) and 15 government hospitals, with a total of 6714 beds, employed 6473 doctors and treated some 2.5m outpatients. This is in addition to 12 private hospitals. The ministry runs a general hospital in each of Kuwait’s six governorates, with the other nine hospitals consisting of specialised institutions such as cancer centres. Further, Kuwait has 67 preventive clinics, 73 diabetes clinics, 83 dental clinics and 34 maternal care centres.

Besides running the above facilities, the MoH also funds treatment and accommodation abroad for certain procedures that cannot be provided in-country. Until 1994, expatriates were able to use MoH facilities for free, but since then they have been required to pay a nominal charge for medical procedures and appointments, as well as an annual charge of KD50 ($175.80).

In the last decade, the cost of providing health care has risen sharply. The government spent $1179 per inhabitant on health care in 2012, according to the World Health Organisation (WHO), more than double the $530 per head spent in 2001.

Figures

Average life expectancy at birth in Kuwait stood at 78 in 2012, according to WHO statistics. In 2011, the last year for which data is available, Kuwait counted 17.9 doctors per 10,000 inhabitants, compared to a regional average of 10.8; for nurses and midwives, the figure was 45 per 10,000, compared to 15.9 regionally. CSB figures put total births at 59,753 in 2012, and total deaths at 5950. Of these, 33,993 births (57%) were to Kuwaiti nationals, and 3210 deaths (54%) were of Kuwaitis. Almost all births were delivered in hospitals – 99% in 2011, according to the WHO.

The World Bank put health care spending in Kuwait at 2.5% of GDP in 2012, down from 2.8% in 2010. Of this, 82.5% was from government expenditure, up from 80.7% in 2010. A report from Kuwait Financial Centre (Markaz), meanwhile, estimates that health care spending in Kuwait will have risen from KD1.2bn ($4.2bn) in 2009 to KD1.6bn ($5.6bn) in 2014 – a compound annual growth rate of 5.9% for the five-year period. On the horizon, though, health care spending looks set to rise significantly. According to projections by Kuwait Finance Centre (Markaz), an asset management firm, the ratio of those of working age to those over 65 is set to drop from 32 in 2010 to just three by 2050. This shift will drive a rise in health care spending.

Private Sector

In addition to its network of state health care institutions, Kuwait is home to several private hospitals and clinics. According to the WHO, in 2012 private pre-paid insurance accounted for 9.4% of health care expenditure in Kuwait. Among the larger private hospitals are Al Salam International Hospital, New Mowasat Hospital, Dar Al Shifa and Royale Hayat.

Al Salam International, established in 1964, is the biggest private hospital in Kuwait, with 169 beds, and is majority-owned by local bank Kuwait Finance House. New Mowasat, founded in 1965, is a 100-bed facility owned by Mowasat Healthcare Company, which is traded on the Kuwaiti Stock Exchange. Dar Al Shifa, Kuwait’s first private hospital, was founded in 1963, but moved in 2003 from Kuwait City to new premises in Hawalli, where it has several outpatient clinics and 100 inpatient rooms. Royale Hayat, founded in 2006, has since expanded from a women’s and children’s hospital into a luxury multi-service provider, and has partnered with global hospitality brand Banyan Tree Hotels and Resorts to differentiate itself in quality of stay as well as of medical care. In general, private hospitals currently compete on service, and treat both Kuwaitis and expatriates. The quality of care available in state and private health facilities is generally high, and standards are comparable to those in most developed countries.

Increasing demand for elective procedures, which are not covered by the state, is set to be a source of growth for the private sector. There is also ample potential for private hospitals to develop their client base by offering additional services. “The main focus of private health care now should be expanding services so as to be able to compete more with government hospitals,” Ahmad Nasrallah, CEO of New Dar Al Shifa Hospital, told OBG.

NDP

In 2010, Kuwait launched its KD30bn ($105bn) National Development Plan (NDP) aimed at reducing the country’s dependence on oil. Partly a stimulus package in the wake of the global financial crisis, the NDP is mostly designed to reposition Kuwait as a regional commercial and financial centre. While the bulk of the funds are allotted to improving physical infrastructure, the NDP does not ignore the health system.

The plan recognises that good facilities are necessary to attract the skilled personnel Kuwait needs to become a more diversified economy, as well as to meet the needs of a growing population with new health issues. As such, the plan envisages spending around KD1.1bn ($3.9bn) on health care, of which much will go to expanding hospital capacity.

The MoH is upgrading nine hospitals – including the Al Amiri, Al Razi, Al Sabah, Adan and Farwaniya hospitals – and building a new one with 1093 beds in Jahra. The Jaber Ahmad Jaber Al Sabah Hospital is a KD300m ($1.1bn) complex that when opened – scheduled for before the end of 2014 – will be the largest medical facility in the country. Taken together, these projects will add more than 4000 new bed spaces by 2016. “With the increasing hospital projects stemming from the NDP, now is the time to begin implementing IT into the health care sector in order to raise our level of competiveness and quality care,” Ghassan Mamlouk, CEO of Advanced Technology Company, told OBG.

Privatisation

In tandem with these investments in physical health infrastructure, Kuwaiti authorities plan to restructure the mechanisms whereby health care is funded – especially for expatriates. The idea is to allow the private sector to assume the bulk of the responsibility for providing health care to Kuwait’s 2.72m expats, in order to free up resources for use elsewhere. To this end, in 2010 the Kuwait Health Assurance Company (KHAC) was launched as a joint project of the MoH and the Kuwait Investment Authority (KIA), the country’s sovereign wealth fund. KHAC is set up as a semi-private health care operator funded primarily via private insurance, but with the government retaining a significant stake and providing regulatory oversight.

Under this system, expatriates will buy health insurance from KHAC, which will then provide primary and secondary care at its own facilities, with specialised care undertaken at MoH facilities for fixed fees. KHAC is structured as a joint venture between the MoH, the KIA and a private investor, whereby the government will hold 24%, the investor 26% and the remaining 50% will be floated to Kuwaiti citizens in an initial public offering. Although its launch was at first planned for 2011, the project attracted only one bid, from Agility Logistics, and so was temporarily shelved.

A second tender in July 2013 drew seven bids, and the contract was ultimately awarded to Al Arabi Holding Group, a Kuwaiti conglomerate with interests in construction, engineering and call centres, as well as health care. Al Arabi’s investment in the venture included $215m as equity and $125m as a bid premium.

Under the project, KHAC plans to build three hospitals and 12 primary care clinics by 2015, providing 900 hospital beds for a total investment of KD230m ($809m). The government plans to provide land for these facilities at favourable rates, on a 20-year lease. Initial premium revenues were expected to total KD130m ($457m) and rise to KD190m ($668m) within six years of operation. However, as of March 2014, the company had yet to commence operations, and health care for expatriates was still being provided at MoH facilities. It also remained unclear at exactly what level KHAC premiums would be priced, although the most likely option is that a number of different insurance plans will be tailored to match different income demographics.

In March 2013, the MoH approved a new system of separating appointment times for nationals and expatriates, and rolled out a trial of this at Jahra Hospital in July, with the mornings reserved for nationals except in cases of emergency. Under the new scheme, expats will be obliged to use KHAC polyclinics as their first choice for medical treatment, though public hospitals will still admit emergency cases.

Non-Communicable Diseases

One area where the resources released by the introduction of KHAC can be redeployed to good use is in non-communicable diseases, of which Kuwait suffers some of the highest rates in the world. Communicable diseases such as cholera, measles and tuberculosis have largely been eradicated in Kuwait thanks to an immunisation programme and high-quality hospital and primary care. However, as in many other wealthy countries, new health challenges have arisen in the form of non-communicable diseases such as diabetes, heart disease and cancer, many of which have their origins in the lifestyle changes that often come with greater prosperity. The leading cause of death in 2011 was circulatory diseases, followed by neoplasms and external causes, according to the CSB. In 2011, according to the Dasman Diabetes Institute (DDI), the prevalence of diabetes in adults stood at 17.6%, compared to 8-10% in the 1990s. Furthermore, the rate of obesity among children was running at around 80%, and among adult males at about 70%, according to WHO figures.

There is some evidence of a genetic predisposition to diabetes among certain population groups in Kuwait. For example, the incidence of the disease is higher among South Asian residents in Kuwait – 19% according to the DDI – than for the general population, even though this group is generally younger and works in more physically strenuous occupations. All the same, in Kuwait as elsewhere, the prime trigger for such diseases, regardless of genetic history, is lifestyle. To combat them therefore involves changing behaviour. To date, there is no overarching strategy to change lifestyles, though a number of small-scale initiatives are bearing fruit, particularly regarding the young (see analysis).

Specialized Medicine

In Kuwait, as in other developed countries, advances in medical knowledge over the past 20-30 years have led to a greater need for specialisation. This contributes to pushing up costs, as medical staff find they must spend longer in education, and as hospitals must procure equipment that is increasingly complex. The MoH and the College of Medicine at Kuwait University cooperate in the education and training of doctors and other health care professionals, and the ministry runs its own internal postgraduate training and certification courses through the Kuwait Institute for Medical Specialisation.

Additionally, the Kuwait Life Sciences Company (KLSC) provides medical training both in Kuwait and in the broader GCC region. KLSC is a subsidiary of the National Technology Enterprises Company (NTEC), a KIA-owned venture capital company whose chief mission is the transfer of knowledge into Kuwait. Via its Life Sciences Academy (LSA), the company runs a number of training and certification programmes in association with several Western universities and research institutes. It offers training to physicians, nurses, dentists, pharmacists and bio-engineers, either through workshops or on a short course basis that allows trainees to work at their own pace. Key to LSA’s success is that it is a noncommercial entity, and thus is trusted to bring together its partners and affiliates. While there is currently no medical research programme in Kuwait, the DDI does undertake some clinical trials in cooperation with its partner organisations abroad. Over the long term, NTEC aims to establish a clinical research centre in Kuwait, but one that delivers high quality results, thus the project may take time before it can be established.

Workforce

The medical corps is a mix of Kuwaiti and expatriate staff. According to the CSB, in 2012 the government sector employed more than three-quarters of Kuwait’s 8259 doctors, 2050 dentists and 21,502 nurses. As for distribution, although 34% of doctors and more than half of dentists were Kuwaiti, less than 6% of nurses were. A global nursing shortage has made recruitment more challenging, with many countries competing to attract qualified nurses. The Ministry of Health includes a specialised recruitment branch, which is responsible for hiring and providing further training.

“The crucial area to spend on in the health sector now is manpower,” Qais Marafie, chairman of KLSC, told OBG. “Investing in our doctors and nurses, and providing them with proper training and education, will ensure a better quality of health care to everyone.”

Medicines

Another area where costs have risen of late is medicines. Since there is little local production, medical drugs in Kuwait tend to be expensive. Most are imported from Europe, the US and Japan directly rather than from cheaper production centres in Asia and the Middle East (though several generic imports come from within the GCC, especially Saudi Arabia). In general, Kuwaiti patients tend to prefer branded drugs to cheaper, generic versions. A 2013 report by local bank Kuwait Finance House put spending on generic medicines in Kuwait at $250m. Spending on patented drugs, the report forecast, would rise from $530m to $810m between 2009 and 2014. Although overall pharmaceutical spending is currently high, this could drop as new medicines enter the market. The registration regime for new drugs is generally regarded as efficient and relatively quick, especially if a given medicine has already been approved by the US Food and Drug Administration or the European Medicines Agency.

A proposal to harmonise drug prices in the GCC, initially proposed in 2013, would enable Kuwait and other small Gulf states like Bahrain and Qatar to enjoy more buying power, since their larger neighbours like Saudi Arabia benefit from greater economies of scale. Although the proposal has been agreed to in principle, the details have yet to be finalised, and implementation is expected sometime in 2014.

Outlook

Now that the KHAC project has been tendered, the Kuwaiti health care system looks set for major change. As the private sector assumes a greater role in delivery of services, existing private hospitals may also benefit from an increased uptake of insurance plans. The government, as both an operator and regulator of the private and semi-private systems, is likely to continue to be the main influence in the market for years to come. Efforts to tackle lifestyle diseases will intensify, especially as privatisation frees up new resources to be dedicated to Kuwaiti nationals, and as public awareness of the issue rises. Drug price harmonisation, too, could lead to major public savings.

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The Report: Kuwait 2014

Health chapter from The Report: Kuwait 2014

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