Dr. Mussaad M. Al-Razouki, Chief Business Development Officer, Kuwait Life Sciences Company
Amidst the backdrop of low oil prices and a ballooning government budget, Kuwait continues to experience growth of the healthcare sector, in large part due to the public sector’s corybantic building initiatives to develop infrastructure. This growth is also despite poor World Bank and World Economic Forum ratings in key indicators, such as regulatory quality and government policy transparency. Indeed, we anticipate that once the growth of the healthcare sector stagnates, it will be in part due to these bottlenecks. The country must institute regulatory control for each sector, especially healthcare due to the large share of government budget it receives (11%). This will stimulate the development of new public-private initiatives such as those seen early on with Dhaman and Afya health insurance.
Kuwait has drastically increased the number of healthcare professionals and ramped up its health sector capital expenditure since its independence, but this growth has languished in the last twenty years. Indeed, in the ten years of preparing this report, the Kuwaiti healthcare sector has not improved significantly in terms of quality and access. The burden of disease in Kuwait remains startlingly high, with some of the highest rates of obesity and diabetes in the world. This will have ripple effects on the country’s medical infrastructure which, given the New Kuwait Vision 2035, is only now starting to meet the population demand in stride.
The public sector has greatly increased the number of beds available to the population by simultaneously building new hospitals and expanding existing ones to double or more their current capacity. The Ministry of Health (MoH) has been the major driver of this, but there are other government institutions such as the Public Authority for Social Security that are establishing their own medical cities. Of note is the challenge of hospital management; the Ministry of Public Works built and MoH operated (partly) Jaber Hospital has capacity for 1168 beds yet is only operating at just around 25 to 50%. This illustrates the need for simultaneous oversight of hospital functions, especially the need to ramp up human capital and operational expenditures in addition to the expansion processes.
The slow-paced growth of the burgeoning private healthcare sector is driven by new medical centers, each looking to cement their own cosmetic or outpatient niche. Medical centers are in line with patient desires and a few even present quality and accreditation not seen in the public sector. Medical centers also present an attractive business opportunity, with KLSC estimating a 30–40% operating income margin for the average successful medical center. With this new growth comes a shortage of physicians, surgeons, and allied health staff.
The future of healthcare in Kuwait rests on the integration of digital systems in existing and new infrastructure. Private patient health records represent a sorely needed technological innovation in Kuwait, as antiquated paper filing systems are still in effect. In addition, hybrid healthcare systems would aid in curbing government spending. Hybrid healthcare systems enable patients to seek health care but pay a premium for faster, better service. If Kuwait is to realize the 2035 New Kuwait Vision, hybrid healthcare and digitized systems must become the new normal.
I. Economic Landscape of Kuwait
The projected budget for the State of Kuwait for 2019/2020 is 22.5 bn KD ($74.9 bn), which represents a 4.7% increase from the previous year. The majority of the budget is attributed to salaries of constituent government employees (~54%). Kuwait also has projected 8.6% higher gross revenue from 2018/2019 at an estimated 16.4 bn KD ($53.9 bn), with the majority of gross revenues are derived from oil. For the fifth consecutive year since 2015, government expenditure will surpass revenue due in large part to oil prices and limited economic diversification.
There are certain alterations in legislation and government infrastructure that must change to enable diversified economic growth. Principal among these is clarifying government policies and improving regulatory quality, which the World Economic Forum (WEF) ranks Kuwait lowest in the Gulf Cooperation Council (GCC). Kuwait has seen a notable increase in regulatory bodies that have oversight of certain institutions (i.e. CITRA for communication and IT regulation), but there is a lack of concerted regulatory efforts in the healthcare sector, specifically between various public sector stakeholders, such as the Ministry of Health, Ministry of Defense, Kuwait Oil Company, and the Public Institute for Social Security and private health sector operators.
In addition, the WEF ranks Kuwait lowest in the GCC for transparency of government policymaking. This makes it exceedingly difficult for the private sector to grow, especially when considering foreign direct investment. Despite the above, Kuwait is experiencing a growing market in healthcare that is best conveyed by an 11% CAGR in the medical device market, an indication that public and private health centers are indeed on the rise.
In order to sustain this growth in the healthcare sector (which is largely driven by public initiatives) and to stimulate quality indicators, it is essential to increase the privatization of healthcare services. This is advised to not only raise the market share of private companies but to ease government burden. An example of such an initiative is Dhaman (also known as the Kuwait Health Assurance Company) which exists as a Public-Private Partnership (PPP) regulated by the Kuwait Authority for Partnership Projects (KAPP) and intends to provide primary health centers to expatriates in Kuwait. Dhaman opened their belated first healthcare center in Cairo Complex located in Hawally in November 2019, which is the first of fifteen (15) planned primary care centers. Whilst ex-pats in Kuwait pay 2–5KD for each government health center visit, Dhaman asks for a nominal 0.5 KD extra on top of these government fees. Dhaman is thus one example of a diversification strategy, at least with respect to healthcare.
The Private Health Insurance Initiative, known colloquially as Afya, is also a prime example of Kuwait’s movement towards increased privatization. The initiative aimed to provide insurance to retired Kuwaitis, usually over the age of 55, however, those citizens opting for early retirement may also qualify. The Gulf Insurance Group (GIG) secured the first tender advertised by the government in 2016 and began offering “Afya” health insurance cards to approximately 123,000 individuals. Members are entitled up to 17,000 KD per year of coverage, with the exclusion of cosmetic additions. As of July 2019, the second edition of the Afya health insurance, also won by GIG plan has expanded coverage to include removal of benign and malignant tumors/neoplasms, cardiac catheterization (including three stents per year), kidney stone removal, dental implants and crowns, and joint articulation with prosthetics. This is a highly strategic move, as Kuwait’s elderly population is gradually increasing in proportion along with this demographic’s burden of disease.
Kuwait spends around 4% of its GDP on healthcare, while other countries of similar population size and GDP spend far more. This may have to do with the size of the private market in Kuwait compared to more developed nations. Illustrating this is the fact that Kuwait’s primary driver of healthcare expenditure is the public sector, which accounts for 84% of the roughly 2.5 bn KD ($8.23 bn) spent per year.
The Ministry of Health in Kuwait is the primary healthcare stakeholder and sole regulator of the Kuwaiti healthcare system yet maintains an opaque end state vision of the healthcare system. This report recommends the separation of regulator, from provider and payor functions, with a strong dedication to improving quality and private sector participation as was done in the neighboring emirate of Abu Dhabi. Almost a decade ago, the 2011–12 Kuwait Government budget was the first time the Ministry of Health spent over 1 bn KD (3.3 bn USD) on the expenditure on the public healthcare system. Today, that same budget of the Ministry of Health is over 2 bn KD.
Furthermore, the percentage of healthcare spending by the MoH as a percentage of overall government expenditure has stayed relatively stable at around 7%, for this budget it is almost 11% of the total budget. However, these figures do not consider the amount spent by the other eight government-related entities such as the Ministries of Defense and Interior, and of the Kuwait Oil Company, that makeup between 10 to 20% of the healthcare sector in Kuwait.
Meanwhile, the private sector within Kuwait spends roughly 150 mn KD ($500 mn), which is dwarfed by the 188 mn KD ($620 mn) that the Ministry of Health alone has budgeted in 2018. Moreover, it is reported that 313 mn KD ($1.03 bn) to 1.37 bn KD ($4.5 bn) was spent by the government on sending Kuwaiti patients abroad for treatment in the last five years alone.
There are seven different government entities that send patients abroad for medical tourism in Kuwait. These include:
1. The Amiri Diwan
2. The Diwan of the Crown Prince
3. The Diwan of the Prime Minister
4. The Ministry of Health
5. The Kuwait Oil Company
6. The Ministry of Defense (including Army, National Guard, Air Force, Navy)
7. The Ministry of Interior (Police)
Similar to the unified overseas treatment processes present in Abu Dhabi and Qatar, Kuwait has a Department of Treatment Abroad present under the Ministry of Health. This office caters to Kuwaiti citizens only and patients are only eligible if the treatment sought is unavailable in Kuwait.
In 2014, the Ministry of Health issued a ministerial decree to curb the stipends issued for Overseas Medical Care, after widespread public criticism and alleged abuse by both patients and their accompanying chaperones. Furthermore, it was reported in May 2018 that the Kuwaiti government would form a team to look into the financial allocations for overseas treatment as the budget for treatment abroad was exceeded.
Originally, the Ministry was providing a daily stipend of 100 KD for each patient and a further 100 KD for the 1–2 chaperones. Any patient sent overseas had the right to one chaperone, with patients under the age of 18 or over the age of 65 allowed a maximum of two. This resulted in the government providing up to 300KD per day for a patient sent abroad, which when extrapolated results in ~110,000 KD or ~375,000 USD per year, which is in addition to the amount spent on the medical care of the patient and the airline ticket. The Ministry has since reduced the daily stipend to 75KD for the patient and 50KD for only one chaperone. If a second chaperone is needed, the Ministry would provide the airfare alone.
According to a report by the State Audit Bureau (SAB), there have been 6,456 reported cases of abuse in the Overseas Medical Program of the Ministry of Health from January 2014 to January 2015, whereby due to pressure from certain high-ranking officials and Members of Parliament, the vast majority of these cases did not immediately require treatment abroad.
It is widely accepted that current government spending on sending Kuwaiti patients and their families abroad is unsustainable. The time for an executive decision to unify the overseas healthcare tourism process is apparent.
II. Health Indicators in Kuwait
In 1936 the Ministry of Public Health in Kuwait was established and quickly grew to be one of the largest and well funded ministries in the country. Prior to Kuwait’s independence from the British Empire in 1961, the general mortality rate is cited as 20–25/1000 adult deaths, while the infant mortality rate rested around 100–125/1000 (for live births — Health System Profile Of Kuwait 2006). This is in stark contrast to the contemporary figure of 2.7/1000 adult deaths and 8.1/1000 infant deaths (for live births) (Kuwait — Demographics and Infant Mortality, UNICEF). The number of hospitals, primary healthcare centers, clinics, and pharmacies has correspondingly increased.
In 1995, Kuwait had a physician-patient ratio of 1.87/1000 and a nurse-patient ratio of 5.0/1000. Since 1995, these ratios increased marginally. It is thought that the aforementioned lack of regulatory oversight and poor liberalization of policies contribute to the slow growth of these health indicators. For comparison, OECD member countries possess 5.2 beds/1000, a physician-patient ratio of 3.2/1000, and a nurse-patient ratio of 8.8/1000. Kuwait’s burden of disease statistics may provide an additional dimension to framing these health indicators. For example, the country has an extremely high percentage of individuals with diabetes (15.8%) and ranks 11th worldwide for obesity (37.9%, not accounting overweight proportion). No other country of similar size and GDP, save for the UAE, has such a high prevalence of diabetes and obesity. Diabetes and obesity introduce a number of complications that include increased risk of cardiovascular disease, stroke, diabetic nephropathy, and neuropathy etc. These complications present an increased burden on the healthcare system which the health indicators do not communicate. The MoH has recognized the increasing burden on the government healthcare system and has commissioned numerous expansions and new hospitals. Unfortunately, no major preventative healthcare initiatives have been implemented or even suggested.
In addition, Kuwait’s dependency ratio is 32, which translates to ~24% of the population being either <15 years of age, or >65 years of age — considered “dependent”. This dependency ratio is quite low compared to the rest of the world, where Ireland has a dependency ratio of 54 and Japan a dependency ratio of 67 (World Bank). Although lower dependency ratios reflect conditions favorable to economic growth, this figure coupled with diabetes and obesity prevalence in Kuwait indicates there will eventually be a much higher burden on the government as the population ages. It is thus important to focus on healthcare infrastructure and professionals to meet this demand.
III. Public Healthcare Mega Projects
Five public sector entities in Kuwait have spearheaded development of new health centers and medical cities to eventually add a total of 7,762 new beds to the public health sector. These entities include:
(1) Ministry of Health (MoH)
(2) Kuwait Oil Company (KOC)
(3) Ministry of Public Works (MoPW)
(4) Dhaman, a Public Private Partnership between MoH and Private Sector
(5) Kuwait University (KU)
The MoH is contributing to the bulk of new beds when it comes to government-managed hospitals, while the other entities listed are pursuing parallel (albeit smaller) projects, save for Dhaman. In the case of Dhaman, two of the three (3) planned hospitals are being constructed by the Metallurgical Corporation of China (MCC) created where the first is in Amghara (Jahra), and the second in Ahmadi; the location of the third hospital is not yet disclosed as construction has not begun, but was originally slated for the Farwaniya governorate. The Amghara and Ahmadi hospitals are expected to be completed in 2020, and will add 600 beds to the healthcare system. These hospitals will be targeting the large ex-pat population in Kuwait. As of the writing of the report, the Metallurgical Corporation of China (MCC) has ceased all construction on both the Amghara and Ahmadi Dhaman hospitals.
There are 4,462 beds in the largest hospitals in Kuwait and the initiative to expand this figure aims to add a total of 7,762 beds to a make a total of 12,224 beds managed by the Ministry of Health. The majority of projects involve expansions of existing facilities. There are, however, several new projects that introduce a large number of beds to the MoH system and target specific areas of Kuwait to ease the load on other hospitals. For example, Adan Hospital receives the most emergency visits per year consistently (~57,000 emergency visits in 2017 alone, Ministry of Health statistics) while Mubarak Al-Kabir Hospital receives the 2nd highest (~39,000 in 2017). Adan receives ~30% more emergency cases per year despite only having 100 more beds than Mubarak Al-Kabir. The reason for this is unclear, though it may involve population demographics and occupation as there are many industrial activities close to Adan Hospital. Thus, the new Sheikh Jaber Al-Ahmad Al-Jaber Al-Sabah Hospital (Jaber Hospital for simplicity) is strategically located in South Surra and may ease the load on the Adan Hospital for emergency cases, however for that to take place, Jaber Hospital must be first fully operational (see below).
Kuwait New Maternity Hospital — MoH
Kuwait has recognized the need for some specialized centers such as the Kuwait New Maternity Hospital (KNMH). KNMH is a 240 mn KD ($790 mn) project led by a joint venture between SSH and Studio Altieri that will feature 27 operating rooms and 780 beds. KNMH is located in the Sabah Health Region close to Al-Razi Hospital and next to the existing Sabah Maternity Hospital (one of Kuwait’s first general hospitals that was built in the 1960s). The nascent hospital will have private inpatient rooms facing the sea, a requirement made by the MoH and MoPW. KMNH is slated for completion in Q3 of 2021, with construction beginning in January 2017. Obstetrics and gynecology comprise the majority of inpatient discharges in the country, though the proportion of inpatient discharges is near equally distributed among the private and public sectors. KMNH may prove to capture a majority of the market now that the public sector has updated care facilities, an anachronistic reality, as many private sector hospitals depend heavily on maternity and delivery services.
Kuwait Children’s Hospital — MoH
The Kuwait Children’s Hospital (KCH) is another nascent project by the MoH & MoPW that aims to deliver high quality tertiary pediatric care. This project, valued at 165 mn KD ($544 mn), is a joint venture between SSH and HKS architecture firm to provide 792 beds on a 300,000 sqm plot of land situated in the Al-Sabah Health Region. Around 99 of the beds will be dedicated to intensive care, and 48 beds will be dedicated to neonatal intensive care. There will also be 30 operating rooms and seven CT scanners. The project is slated for completion in 2023 after delays, where the original date of completion was posited for Q3 2020. This project is anticipated namely because pediatrics comprise a large proportion of hospital visits in Kuwait. Outpatient pediatrics is dominated by the private sector, but inpatient pediatrics is dominated by the government sector. According to Zion Market Research, the global pediatric healthcare market sits at ~$12bn as of 2018 and is expected to reach ~$16bn in 2025 with a CAGR of 4.35% between 2019 & 2025. Chronic disease & sedentary lifestyle are among the biggest contributors to this growth, globally; Kuwait’s obesity and diabetes figures reflect this. In particular, child obesity and diabetes represent a major challenge in Kuwait that must be surmounted with proper facilities like KCH.
Sabah Al-Ahmad Area Hospital — MoH
Sabah Al-Ahmad, the new residential area located in the southern end of Kuwait, will have its own hospital. This is a MoH project that aims to add 500 beds with several buildings with different specialities. There will be buildings dedicated to dialysis, physiotherapy, surgical operations and an outpatient building. The project is due by 2023 and is built upon ~300,000 sqm.
Kuwait Medical City — Public Institute for Social Security (PIFSS)
The MoH is not the only entity in Kuwait to deliver new medical projects. The Public Institution for Social Security (PIFSS) has been tasked with creating the Kuwait Medical City (KMC) in Amghara, Kuwait, which is the same area as one of the Dhaman hospitals and within a 10 minute driving radius of the New Jahra Hospital. KMC will feature a 400 bed hospital that may be expanded to 800 and will be situated on 860,000 sqm. The Medical City will prioritize service for Kuwaiti retirees and will feature five (5) centers of excellence (cardiology, respiratory, digestive, urology, and orthopedic). The project is slated for completion in 2026 and as of September 2019 has only established an executive committee. The committee concluded that around 20% of the allocated land will be used for medical facilities, while the rest is distributed for housing, entertainment, and commercial use; there is also an allocation for private universities.
All the previously mentioned projects are part of the New Kuwait Vision 2035 initiative that focuses on seven (7) pillars of the economy to support Kuwait’s transformation into a competitive financial, commercial, and cultural hub. Health care is one of the seven pillars, where the country aims to improve upon infrastructure to promote better health for the population, as well as accessibility.
Hospital Management in Kuwait — A New Challenge
Iceberg Challenge of Hospital Management
As a direct result of the large number of hospitals and hospital beds added, Kuwait now suffers from the lack of hospital managerial capabilities. The lack of proper planning for human capital consideration is common in most developing nations and usually is secondary when compared to capital expenditure on physical assets. As a result, both the recently inaugurated Jaber and Al Jahra Hospitals are operated at minimal capacities.
On December 3rd, 2018, the Kuwaiti Council of Ministers assigned the Ministry of Finance and the Ministry of Health to expedite the process of appointing an international management partner for Jaber Hospital. In response, the Kuwaiti Al-Enaya Company for the Management of Hospitals (which was created in October 2017 and initially capitalized at 150mn KD or ~$500mn, which a paid up capital 3.75 mn KD or $12.35 mn) was tasked by the Council of Ministers to oversee this process. The board of Enaya was comprised of both public sector civil servants and private sector experts. A business plan exercise was conducted by a global healthcare consulting firm.
The study suggested a phased approach to ramp up operations at Jaber Hospital to a capacity of 570 beds in three years (this is 50% of the intended designed capacity of 1168 beds). The study also suggested that Enaya would then lease the remaining empty space to private sector providers but at the same time integrate their services into the core hospital services.
The study estimated a CAPEX+OPEX of at least 200mn USD to sustain the first three years of operations. This should be considered a conservative assessment has given the calculation of 500 mn KD or $1.64 bn operational expenditure by the Supreme Council of Planning in early 2018.
The management consultancy then shortlisted seven international consortia, where the intention was to have the private consortium contribute 26% of the CAPEX+OPEX in exchange for 26% of the equity and management control, following the Privatization Law of 2010, which dictates that any government entity/asset/corporation must be ‘privatized’ according to the following framework:
· 50% will be offered to the public by means of a public joint-stock holding company listed on the Kuwait Stock Exchange (KSE)
· 26% (golden operating share) will be offered to a private (technical/financial) partner/consortium where strong preference is given to Kuwaiti companies, particularly those already publicly listed. The consortium is also encouraged to involve international technical partners and investors with exemplary track records
· 24% is retained by the State of Kuwait through the state-owned investment vehicle(s)
As of the writing of this report, there has been no international consortia or partner appointed to Jaber Hosptial. The hospital is currently operating at partial capacity by the Ministry of Health and is only receiving outpatients of Kuwaiti citizenship from the surrounding Hawally governorate.
The New Al-Jahra Hospital
As 2019 marked the 40th anniversary of diplomatic ties between South Korea and Kuwait, the Prime Minister of South Korea, Mr. Lee Nak-yon signed several bilateral agreements with his Kuwaiti counterpart in early May, 2019. Health care cooperation between Korea and Kuwait started accelerating after an MOU on cooperation was signed between both health ministries in 2016. Since then, Kuwait has become the second country to send government-funded patients to Korea after the United Arab Emirates. As the first Kuwaiti physician started receiving medical training in Korea in 2018, bilateral cooperation was expanded to medical services and ICT-based medical systems. To this end, the Ministry of Health and Welfare of Korea and the Ministry of Health of Kuwait have signed a letter of intent. The Ministry of Health of Kuwait also expressed great interest in the Korean hospital management information system. The system was exported to six hospitals under the Ministry of National Guard in Saudi Arabia. On the 4th of July, 2019, it was reported that Seoul National University Hospital (SNUH) would manage and operate the ~1200 bed New Jahra Hospital in Kuwait under a proposed five year budget of 1.3 bn KD or $4.23 bn. SNUH signed a similar management contract to manage the 264 bed Sheikh Khalifa Specialized Hospital in Rask Al Khaimah, UAE, in 2014 for a total of 260 mn KD or $856 mn. The project is one of eight cooperative measures for the development of bilateral ties signed by Prime Minister Lee and is expected to kick off in late 2020.
State-Sponsored Medical Tourism
Outgoing medical tourism sponsored by the Kuwait government for Kuwaiti nationals has not only been identified as a financial burden on government budget, but also a major abuse of the process. The founding principal of this program revolves around the lack of specialized surgical/non-surgical procedures in Kuwait due to the small size of the patient population, yet this has distorted to abuse of the system by citizens partly because of the benefits associated with the program. Originally, the Ministry of Public Health provided 100KD of per diems for each patient and a further 100KD for 1–2 chaperones. Thus, it is estimated around 110,000KD or $362,000 was disbursed in daily stipends alone before Oct. 2014, resulting in spend of close to 40 mn KD or $132 mn on patient pocket money. Subsequent to this realization, the Ministry reduced the daily stipend for the patient to 75KD and 50KD for a single chaperone.
The MoH Overseas Medical Department — Kuwait
Following this, in June 2019 a ministerial decree to further reduce medical tourism expenditure was announced. This is reflected in the 2019/2020 budget report published by the Ministry of Finance that states that 250 mn KD ($822 mn) is allocated to treatment abroad, whereas the previous budget report for 2018/2019 utilized 373 mn KD ($1.23 bn). The State Audit Bureau is primarily responsible for the resulted reduction, as it reported numerous medical cases that could be resolved with existing health services in the country in addition to cases of blatant abuse. Medical tourism is clearly a nonviable long-term solution to medical treatment, hence the important initiative to expand the health care system in Kuwait.
IV. Private Healthcare
It is necessary to delineate private vs. public health care usage in Kuwait because of the different entitlements granted to nationals and expatriates residing in the country. By virtue of their citizenship, Kuwaiti nationals are entitled to free public health care, while all expatriates or their employer must pay a fee, albeit diminutive (50KD), with each residency renewal to access government health care. It should also be stated that the large majority of expatriates in Kuwait are male laborers that tend to earn less — this may aid in explaining the following statistics.
Among nationals who utilize outpatient services, around 40% use private centers whereas 51% utilize public centers (the remaining 9% utilize oil sector health centers). Among expatriates, only 29% utilize private health centers while 66% utilize public institutions for outpatient services.
Among nationals who utilize inpatient services, around 14% use private centers whereas 81% utilize public centers. Among expatriates, 64% utilize public health centers while 35% utilize private health centers. OB/GYN, pediatrics, and general surgery is the most utilized inpatient and outpatient service in the private sector.
Private Hospitals in Kuwait
There are 16 private hospitals in Kuwait, but the majority share of outpatient visits occurs in the older hospitals established in the 1960s & 1970s: Al-Salam, Dar Alshifa, Al-Mowasat, Hadi . Relative to these, Taiba Hospital (est. 2002) has captured a good share of outpatient visits, but newer hospitals such as Al-Omooma (est. 2009) do not occupy a significant stake in the market.
Despite this, there are several new hospitals to consider where data is not yet available. Notably, the Sabah Al-Salem area is experiencing a significant surge of new medical centers, specifically in Blocks 1 and 2. There is also an abundance of new clinics that specialize in medical and cosmetic servies around Kuwait, as the business model is in line with patient expectations.
The Kuwait Hospital in Sabah Al-Salem has been marred by legal qualms with the Alleghany group, the contractor that was tasked with management solutions of the facility. It has thus been unable to open to the public at the time of writing, depite the project being as early as 2010 and refursbished in 2018.
Wara Hospital, which opened in the summer of 2019, consists of 14 floors and features an emergency care unit as well as numerous specializations including gastroenterology and hepatology. Wara Hospital has assumed a “patient centric” method of care instituted in hospitals around the world that is more efficient than traditional operational methods. The Mazaya Holding Company, a leading real estate develop in the GCC, oversaw the construction and delivery of the building itself.
The Royal Victoria Medical Center in Block 1 of Sabah Al-Salem has launched operations in Q4 2019. The medical center occupies 7 floors and has a variety of specializations: ophthalmology, internal medicine, OB/GYN, pediatrics, dermatology. The hospital aims to provide upscale service, reminiscent of Royale Hayat Hospital in Jabriya.
The Al Salam Hospital has started construction on a new branch in the Al-Ahmadi governorate in Q1 2019 which boasts 50 beds. There are seven operating rooms, a maternity ward, eight rooms allocated for day surgeries, and eight ICU-CCU rooms. The maternity ward contains nine delivery rooms and two rooms for cesarean sections.
Private Clinics and Medical Centers in Kuwait
Private clinics and medical centers represent a burgeoning segment in Kuwait due to their alignment with patient demand as well as attractive operating income margins. The Ministry of Health has employed less Kuwaiti physicians over the years in favor of expatriate physicians. This may be due to budget control initiatives as Kuwaiti physicians demand higher compensation than expatriate physicians. This is important because it incentivizes Kuwaiti physicians to transition to working or operating their own private clinics/medical centers, albeit with better standards and practices compared to public institutions.
This is reflected in the 25 new medical centers around Kuwait that are either completed (yet mostly empty) or nearing completion. These medical centers contain 550 clinics with an average occupancy rate of 40%; it is estimated around 500+ doctors will be employed in these new medicals centers. The two specializations in highest demand are OB/GYN and pediatrics — these specialties take the bulk of physicians (~184). Despite the growth of new medical centers and clinics, Kuwait’s health care sector is still experiencing a shortage of physicians that the modest 4.55% and 3.81% growth rates (for Kuwaiti and ex-pat doctors, respectively) cannot reconcile.
Private Pharmaceutical Manufacturing in Kuwait
The Kuwait Saudi Pharmaceutical Industries Company (KSPICO) is the only pharmaceutical manufacturer in the country. In August 2019, the Mezzan Holding Company acquired a supermajority 67% stake in KSPICO for 21 mn KD ($69.1 mn) granting the recently publically listed Mezzan Holding Company a majority seat and effective control over KSPICO.
KSPICO began operations before the Gulf War of 1990 and partnered with the Swedish Astra AB company (which later merged to form AstraZeneca) to aid in standardizing manufacturing protocols. KSPICO produces over 150 medications locally in solid, liquid, and semi-solid form as well as medicines designed for parenteral administration.
Mezzan Holding Company plans to expand the reach of KSPICO and grow the company as it possesses a unique market advantage in the 500 mn KD ($1.65 bn) Kuwaiti pharmaceutical market. Kuwait’s pharmaceutical needs are met by importation, which, similar to overseas medical tourism, is mostly an expensive and nonsustainable practice as global medical inflation continues to rise.
V. Future Outlook
With the New Kuwait Vision 2035 initiative, the government has spearheaded the lion’s share of healthcare advancements in the country. Of note is the Sheikh Jaber Al-Ahmed Al-Jaber Al-Sabah Hospital (Jaber Hospital), now one of the largest in the region and the world that is better situated to serve the population.
However, it is strongly advised to emphasize patient-centric care to not only complement the new hospital’s cutting edge technology, but to increase market share. The patient-centric care movement began in the early 2000s and is defined by the Institute of Medicine as “providing care that is respectful of, and responsive to, individual patient preferences, needs and values, and ensuring that patient values guide all clinical decisions.” Patient-centric care arose primarily in the United States where physicians and hospitals are paid based on clinical outcomes and patient satisfaction; Medicare in the US now implements such indicators. While this funding scheme in Kuwait is non-applicable, there are still useful teachings to glean from this philosophy. Patient-centric care can be best summarized as more doctor-patient engagement. This has two main effects: (1) increased patient perception of their health state which can impact their condition and (2) less referrals and diagnostic necessity — more efficiency. This is logical, but requires training and proper leadership.
If Jaber Hospital and other large infrastructure investments are successful in implementing this organizational change, and data is presented from the hospital showing the efficacy of it, then it should follow that future health care in Kuwait follows suit.
Technological advancement in the hospital is guaranteed, especially in diagnostic tools, but something equally important is the digitization of hospital systems. Dhaman signed a strategic partnership agreement with IBM to create a digital health system to improve health care. Of particular importance is the Electronic Medical Record (EMR) that allows health professionals to access patient information quickly. Kuwait still uses antiquated paper filing which, coupled with a lack of oversight, leads to misplaced patient files. The public health sector is perfectly poised to deliver an EMR system considering the market share it possesses. Blockchain technology can complement this by ensuring patient record security, making files only accessible to trusted parties. It remains to be seen how Dhaman will implement the digital health system it opens the doors to their hospitals and clinics.
Even though the future of quality healthcare is firmly set in the coalescence of the digital world with not just the physical world, but the biological one as well (what is known as the singularity) the healthcare industry and its stakeholders must still be open to embracing a hybrid approach if they are to truly scale their business.
Ever since the stone age, healthcare has always been affiliated with the physical world. Doctors would visit with patients the same way they do today, the only difference would be that these ancient Babylonian doctors were paid based on how many of their patients remained healthy, not the current fee for service model of ‘sickcare.’
Today, some 4,000 years after Hammurabi’s famous coded tablet, digital health entrepreneurs must consider both hybrid models of healthcare finance and healthcare delivery. Coding the digital realm is not enough. To grow, healthcare stakeholders must dare to cross the digital divide and plunge headfirst into the archaic world of traditional healthcare delivery.
There are approximately 7.5 billion people that share our planet. It takes roughly seven trillion dollars per year to keep this global population relatively healthy. No hospital, no matter how tall or wide, can treat all those people. True scale in healthcare can only be achieved through digital means. The belated promise of prevention in healthcare, a pyrrhic battle until the recent widespread use of smartphones, will also only be realized by digital means. The holy grail of healthcare, that is precision or personalized medicine, will also only be seized by hybrid technological innovations.
Traditionally the art and science of medicine (and some would say even the very nature of life itself) relied on the constant yin and yang of ‘trial and error’. Hybrid healthcare is taking that same stochastic process and exponentially increasing its base and pace thanks to the power of digital technologies, data collection, and analytics. This process of rapid experimentation across marketing funnel(s), product development, sales segments, and other areas of the business will help the most diligent digital health entrepreneurs find the most efficient way(s) to scale their business. And healthcare has always been about scale. Digital healthcare entrepreneurs and traditional healthcare stakeholders will also need to employ a hybrid healthcare approach to address the pain points of future generations.