With a dozen private hospitals already operating in the country, Kuwait has a thriving private health care sector. The role of private investors in health care is likely to grow over the coming years as the government looks to harness the capital and expertise of international players in particular. The sector is also being driven by the government’s target of 22 hospital beds per 10,000 people by 2030, alongside developing specialist care to meet the changing needs of the country’s growing population.
Market Opportunities
Kuwait Direct Investment Promotion Agency identifies two particular areas of potential for private investors, “lifestyle clinics” and speciality hospitals. It defines lifestyle clinics as centres dedicated to addressing lifestyle-related illnesses such as diabetes and obesity, which are on the rise, and sees particular potential for the development of speciality hospitals focusing on conditions for which many Kuwaitis travel abroad for treatment.
Rashed Fadala, the chairman and CEO of Taiba Hospital, the country’s first medical organisation to acquire Joint Commission International Accreditation, told OBG that encouraging the private sector to grow would be the best way to meet heightened demand for hospital beds. However, he added that more could be done to promote private investment. “The number of beds is increasing out of necessity – but if the private sector was truly allowed to flourish, then there would be no shortage,” he said.
A number of areas in which private investors can participate in health care were highlighted in a 2016 report released by professional services company EY titled “Health care and life sciences in the GCC”. These are primary care services, specialised centres of excellence, home health care services and long-term and post-acute care rehabilitation. EY also sees potential in biotech and medical disposables manufacturing. Home care and telehealth – use of ICT to enable diagnosis and treatment over long distances – could be expanded in remote areas of Kuwait. The global home care market is expected to be worth some $228bn in 2016, according to EY, yet the segment is not well-developed in the region. The relatively wealthy and technologically-connected Kuwaiti population, and the growing number of older people, suggests there is sizeable potential in this area.
Public-Private Partnerships
Private involvement in health provision need not be limited to separate, privately-owned hospitals and clinics. Kuwait’s evolving model of public-private partnerships (PPPs) allows for private investors to become involved in the financing and management of public sector services. A new PPP law that came into force in 2015 improved the regulatory framework for partnerships. Press reports in late 2015 suggested the government was considering the transfer of management of some public hospitals to the private sector, through PPPs.
In December 2015 private equity firm Al Masah Capital announced plans to invest $300m in Kuwait and its GCC neighbours through the Avivo Group, its health care arm. It highlighted the potential from Kuwait’s infrastructure investment programme and PPPs, saying that it was coordinating its development plans with the Kuwait Development Plan 2015-20, with the aim of supporting the latter to meet rising demand for health care and to boost innovation.
Advantages
A 2015 report by the National Bank of Kuwait (NBK) highlighted advantages of the new PPP system, including the potential for private partners to “introduce economic efficiencies and facilitate the adoption of new technologies and know-how”. These are important factors in the Kuwaiti health system, which has historically lagged behind other countries in the region on ICT uptake and management processes. As the NBK pointed out, persistently low oil prices throughout 2015 and in early 2016 have lowered state revenues (see Energy chapter), making bringing in private investment even more of a priority.
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