As one of the largest health care markets in the MENA region, Egypt is looking to meet rising demand for services driven by its growing population. While efforts are being made to extend care to all citizens, the health care system remains strained by a rising population and structural weaknesses such as fragmentation, low government expenditure and reliance on out-of-pocket spending. The World Bank has recommended that social health insurance be mandatory and expanded to all Egyptians by 2030 to ensure that health spending does not contribute to poverty. With national finances under pressure, public-private partnerships are increasingly seen as the way forward.
Key Stakeholders
The system remains fragmented, with numerous public entities involved in the management, financing and provision of care. Multiple ministries, the armed forces and police, non-governmental organisations, religious charities and private health care facilities all make up this network. This results in a relatively wide geographic spread of accessibility and coverage, according to the World Health Organisation (WHO).
The Ministry of Health and Population (MoHP) is responsible for health and population related policy and the provision of services for public health. However, the training of doctors, nurses, dentists and pharmacists and university teaching hospitals fall under the authority of the Ministry of Education. This division is part of the complexity when it comes to funding medical education programmes as well as enforcing standards.
The system is recognised as being in need of reforms as well as greater levels of support from the private sector. Recent initiatives are expected to buttress this going forward. Bilateral and multilateral partnerships provide support, namely through the likes of the European Commission, World Bank, the US Agency for International Development, the Japanese Development Fund and the African Development Bank. There is also a strong presence and partnership with the WHO and the Egypt country team for the UN.
Key among the challenges, as identified by the WHO, are the “need for a strengthened regulatory body overseeing the health system … more effective intra- and inter-sectoral collaboration”, and greater equity in basic health services and human resource planning, among others. The WHO has also called for bolstering the capacity of the MoHP and reducing bureaucratic red tape. As such, the agenda for the 2010-14 WHO and Egypt Country Cooperation Strategy focused on building institutional capacity and the functionality of the health system, addressing non-communicable diseases, injuries and the social determinants of health.
Changing Demographics
The population surge of recent years has added strain to an already burdened health infrastructure. As of late 2014 the population was growing at a rate of 2.6% per year, and had grown by 46% since 1994, from 60m to around 88m, according to the US-based Population Reference Bureau. In November 2015 Egypt’s population reached 89.9m, data from the Central Agency for Public Mobilisation and Statistics (CAPMAS) shows, and in early December of the same year it topped the 90m mark.
An increase in fertility levels adds force to the overall rate of growth of Egypt’s population. After a decades-long decline in fertility rates (births per woman), in 2014 they were found to have risen to 3.5. Certain health indicators, such as falling infant mortality rates and increasing life expectancy, will also contribute to more rapid population expanINDICATORS: Egypt was ranked 110 out of 185 countries on the 2014 UN Development Programme’s Human Development Index, which found that 14% of the population was living below the international poverty line of less than $2 per day.
Life expectancy as of 2013, the latest year for which data is available, was 71 years (69 for males, 74 for females), an increase of nine years since 1985, according to the World Bank. The infant mortality rate has also plummeted from over 110 in 1982 to 20 in 2015, a number that is half the world average. At the same time, the maternal mortality ratio (per 100,000 live births) has declined significantly, from 106 in 1990 to 33 in 2015.
Despite the gains made in the reduction of child and maternal mortality over recent years, there remain significant regional disparities. The differential in under-five mortality between children living in rural Lower Egypt and rural Upper Egypt is particularly marked (28 and 42 deaths per 1000, respectively), according to the “2014 Egypt Demographic and Health Survey” by the MoHP, El Zanaty and Associates, and the Demographic and Health Surveys Programme. Addressing these disparities requires a continued focus on primary health and preventive medicine, with the UN programme working to keep attention and resources directed towards this part of the country.
One of the critical services areas currently receiving attention from the government is that concerning hospitals and access. According to data from the WHO, in 2012 Egypt had 0.5 hospital beds per 1000 people, whereas just two years earlier, in 2010, there were 1.7 beds per 1000 people.
Communicable Diseases
While the proportion of deaths attributable to communicable diseases has declined, both hepatitis B and C remain serious public health concerns, with the WHO claiming that the prevalence of hepatitis C may be on the rise. This highly infectious blood-borne virus results in an estimated 40,000 deaths each year in Egypt. Around 10% of the population between the ages of 15 and 59 is infected with the hepatitis C virus. The fact that many people are not aware that they are infected (due to time required to develop recognisable symptoms) compounds the challenge of countering the virus.
An awareness campaign with support from the UN Children’s Fund and the WHO is being developed, while the 2013-18 national hepatitis plan drawn up by the National Viral Hepatitis Committee, the MoHP and its partners places a strong emphasis on prevention. As part of the plan, the WHO is supporting the government in setting up a national system to collect hepatitis data to understand trends and adapt responses where required. Yet, as the WHO cautions, raising standards will require additional resources.
In March 2015 the first factory was opened in Egypt for local production of Sofosbuvir, a drug containing the active ingredient in Sovaldi, the US-approved medication used to treat the virus. Pharmed Healthcare, a joint venture between Indian, UAE and Egyptian partners, oversaw the opening of the LE250m ($34.1m) factory, having obtained a licence from US firm Gilead Sciences to manufacture and market the drug in Egypt.
It should be possible to make headway in the fight against hepatitis C, according to Sherine Helmy, CEO of Pharco Corporation. “The drug industry should have one purpose: to effectively eradicate diseases like hepatitis C, which is a priority for the president of Egypt, at an affordable cost. In reality, it should not cost more than $5 a day for treatments like hepatitis C cures,” Helmy told OBG.
Non- Communicable Diseases
Non-communicable diseases (NCDs) such as cardiovascular diseases, diabetes, cancer and chronic respiratory diseases, are now the leading cause of death in Egypt, according to the WHO. NCDs are estimated to account for 82% of all deaths in the country. The 2011-12 STEP wise survey, conducted by the MoHP in collaboration with WHO, found a 17% prevalence of diabetes and a 40% prevalence of hypertension in Egypt, with obesity also a growing local problem.
“Egyptians’ sedentary lifestyle and bad eating habits mean the country has the seventh-highest prevalence of obesity worldwide, 70% of people are overweight and there are more than 7.5m diabetics. Couple this with the fact that 26% of adults have hypertension, and we can see why pharmaceuticals companies are trying to re-enter the market,” Mohamed El Dababy, Egypt vice-president and general manager for Novo Nordisk, told OBG.
The MoHP works closely with the WHO on initiatives to control NCDs, including through technical assistance for a multi-sectoral national action plan, raising awareness of the risks from tobacco use and promoting hikes in tobacco taxes. The WHO is also supporting efforts to raise awareness regarding dietary behaviour and reducing the intake of salt and trans fats, among other things.
New Spending Targets
The spending target for health in the fiscal year 2016-17 is approximately 3% of GDP, based on the requirements laid out in the 2014 constitution. This compares with an average of around 4% of GDP in the MENA region, 12% in high-income nations and an international average of 10%. The current budget allotment for health of LE42.4bn ($5.8bn) is up from the LE33.5bn ($4.6bn) in the previous year’s budget.
A new tax on cigarettes is meant to provide government coffers with an additional LE5bn ($681.5m) each year, much of which is to be allocated for spending on health services. Egypt’s tobacco tax has been one of the lowest globally. The move to raise the tobacco tax level is in line with Egypt’s commitment to the WHO’s Framework Convention on Tobacco Control, which aims to bring about policies on taxation and pricing that serve to reduce the impact from smoking.
Support in 2015 from the World Bank included a boost of $275m in February to help the government provide comprehensive health care to all Egyptian families during the next five years. The funding focused on families in the poorest villages, mostly in Upper Egypt. The government has also been in negotiations for a further $300m loan from the Word Bank, which would support health care in government-run hospitals through the provision of medical equipment and drugs. Spending would be based on the findings of a comprehensive survey conducted by the MoHP and the health departments of governorates across the country.
Expenditure
Total expenditure on health (as a percentage of GDP) was 4.9% in 2011-12, down from 5.4% in 2000, according to the World Bank. However, in 2013 expenditure rose to 5.1%. Per capita health expenditure in current US dollars rose from $77 in 2006 to $131 in 2010 and $142 in 2011, but then fell from $158 in 2012 to $151 in 2013, according to the World Bank. Out-of-pocket expenditure as a percentage of private expenditure on health in 2013 reached 97.7%, which was virtually the same as the 97.4% seen in 2000, WHO data shows. Private prepaid plans, as a percentage, totalled a nominal 1.7% in 2011, up from almost zero, at just 0.4% in 2000. In 2013 the WHO reported that around 50% of total health expenditure was out-of-pocket and at the point of service in both public and private facilities.
Spotlight On Equity
The World Bank has called for greater equity and social justice in Egypt’s health system. It hopes that a comprehensive system would reduce private spending on health and lower the risk of individuals and families falling below the poverty line because of spending on health care. Spending on health services by the poorest 20% of the population reaches around 21% of their income, according to data from the World Bank. This is in contrast to the 13.5% spent by the country’s richest 20% of the population.
Consititutional Role
New constitutional requirements should serve as an impetus for driving improvements in the country’s health care system going forward. This includes the area of emergency care. As Article 18 of the 2014 constitution stipulates, “Every citizen has the right to health and to comprehensive health care … the State shall maintain and support public health facilities that provide health services to the people, and shall enhance their efficiency and their equitable geographical distribution.”
Additional outside support also comes from development financial institutions such as the European Bank for Reconstruction and Development (EBRD), Deutsche Investitions- und Entwicklungsgesellschaft (DEG), Société de Promotion et de Participation pour la Coopération Economique (Proparco), and the private equity group Abraaj, through its North Africa Hospital Holdings Group.
Insurance
Egypt’s health care system provided coverage to more than half of the population in 2014. It is expected that laws being prepared will ensure greater coverage in the coming years. The constitutional requirement for a “comprehensive health insurance system covering all diseases for all Egyptians” should also stimulate the insurance scheme. The constitution stipulates that “the Law shall regulate citizens’ contribution to or exemption from its subscriptions based on their income rates”. Moreover, it is a criminal offence to refuse to provide medical treatment to any human in an emergency or a life-threatening situation.
The insurance drive received a boost in early 2015 from the doubling of subsidies, in keeping with the constitution’s requirement of spending of 3% of GDP on the health sector. Subsidy hikes of 208% for the health insurance system were approved at the start of 2015, from LE811m ($110.5m) to LE2.5bn ($340.8m). At the end of 2014, subsidies provided by the government for medical care for “incapable citizens” had climbed by 28.2% (November), jumping from LE255.6m ($34.8m) in October to LE327.8m ($44.7m). This was a 22.4% year-on-year rise over the LE267.8m ($36.5m) subsidies in health services recorded in November 2013.
Ahmed Emad El Din Rady, the minister of health, told local media in mid-November 2015 that the medical insurance law had officially been finalised subject to review and ratification by the president. The new law requires a mandatory contribution of 4%, with the employer contributing 3%. According to El Din Rady, the ministry will start implementing the new scheme in a few cities as a pilot, and subsequently it will be rolled out across the country. The ministry will also establish a quality control authority for hospitals reporting to the presidency.
Medical Staff & Training
The level of training for hospital staff remains a serious challenge. Public hospitals are overstaffed by a factor of around three-fold, but there are severe restrictions on enforcing redundancies. According to the WHO, the density of health workforce per 10,000 people is 28.3 for physicians (2006-13), 35.2 for nursing and midwifery personnel, and 4.2 for dentists. This compares with 11.4, 16.1 and 1.9 for physicians, nurses and midwives, and dentists, respectively, per 10,000 population in the wider Eastern Mediterranean region, as per WHO figures.
Investments
The MoHP’s plan to build 26 new hospitals falls under the government’s Health Care Reform Programme, which entails renovation of existing facilities and integration modern technology, including for underserved parts of the country. The reform programme’s goal of providing universal access to all Egyptians by 2030 will depend in large part on the private sector, which is anticipated to contribute most of the growth in spending in the next few years.
Indeed, there is a growing interest in private sector involvement in Egypt’s health system, including in the ownership of private hospitals. Greater private sector involvement is seen as a promising way of raising standards across the health care sector.
As the primary investor in one such project, the Abraaj Group will invest a total of around $145m in the upgrading of two hospitals, the Cleopatra Hospital and the Cairo Medical Centre. The project will include a number of initiatives, including the training of nursing staff (both clinical and soft skills), acquiring radiology and imaging equipment, as well as upgrading operating theatres to support new medical procedures. The group will also renovate the infrastructure and general facilities, and prepare for Joint Commission International accreditation. Abraaj Group’s plans for Cairo Medical Centre include buying a stake of 41.98% in the 177-bed hospital in east Cairo, valuing the business at LE202.5m ($27.6m). The EBRD will make an equity investment of $25m, and another $15m each will come from DEG and Proparco.
A partnership agreement between GE Healthcare and the MoHP signed in March 2015 (and supported by the WHO) brings the prospects of significantly enhanced biomedical services across the country. Phase one of the project will include a feasibility study for creating a biomed centre of excellence, before moving onto the second phase and launching the centre, which will be run through cooperation between the WHO and GE.
Pharmaceuticals Sector
More than 90% of the pharmaceuticals that are consumed by Egyptians are produced in-country, according to figures from the WHO, and Egypt is also a major producer of vaccines. Spending on pharmaceuticals makes up more than 33% of health spending, 85% of which is private expenditure.
“The pharmaceuticals industry is strong and resilient, posting double-digit growth over the past few years and still showing high potential for chronic disease treatments,” Khaled Atef, country president of AstraZeneca, told OBG.
Stakeholders are looking for new channels for exports and there is particular potential for raising Egyptian export levels to Africa. Constraints for the sector include shortcomings in regulation and the protection of intellectual property rights, bureaucratic delays and restrictive pricing, though in terms of pricing there are signs of improvement.
“Given Egypt’s location and strong trading relationships, it can be a very effective producer of medical supplies for a number of countries in the region, such as Sudan and Libya, as well as for other places like Eastern Europe,” Omar El Fata, CEO of AMECO, a Cairo-based disposable syringe and hypodermic needle manufacturer, told OBG.
Pricing Restrictions
Pharmaceutical prices for the consumer remain extremely low. One example is the memorandum of understanding signed between the government and US firm Gilead Sciences for supply of Sovaldi, the company’s hepatitis C treatment, for 1% of the original price.
Yet there are signs that the MoHP is moving towards a change in pricing restrictions. The pharmaceuticals sector anticipates more collaboration with the government and parliament to enable price increases to make the sector more viable. It is also hoped that as part of the government’s overall investment drive, it would bring in greater amounts of foreign currency in order to import more needed raw materials, and accordingly encourage price increases in pharmaceuticals to make it a more attractive industry for investors.
Outlook
Although notable progress has been made in basic public health, further expansion will require greater investment from both the state and private industry. There is rising interest in supporting primary health care, and Egypt is moving towards a health model emphasising prevention and primary care over inpatient treatment. There is scope for expanding the number of hospital beds, an area of direct interest to the private sector. Integration within the fragmented health care space is considered a key area for improvement, while bolstering human resources could help alleviate bottlenecks and high rates of staff turnover.
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