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The challenges of healthcare investment and provision in the Middle East

Stethoscope & currency

IMTJ spoke to Dr Mussaad Al-Rozouki, CEO of Kleos, a Kuwaiti based and Middle East focused healthcare development company that connects high net worth and institutional investors with lucrative healthcare assets and opportunities in the Middle East and North Africa. The Kleos team has been involved in over one billion dollars of healthcare investments and currently advises senior government and private stakeholder investors in healthcare.

Who runs Kleos?

There are five different principals, two in Kuwait, two in United Arab Emirates and one in the US.  We are all passionate about healthcare and believe in the importance of developing high quality healthcare for the region and in the long-term opportunity of the sector.

We also work with a wide network of over fifty international healthcare experts that contribute to the business, all involved in different aspects of healthcare including technology, health economics, health finance and public policy.

Who do you work with?

We work with a range of sectors interested in investing in healthcare.  We advise Governments on public/private partnerships.  We also work with healthcare operators and companies to grow their platform in the region.

What are standards of medical care, services and facilities like in the region?

Most of the Arab countries have a socialised system. Almost 80% of healthcare is provided by the government, but there is a perception by the patients that level of services is not as good as in the West which is something we need to address.

One of the biggest challenges is the lack of infrastructure, most hospitals and clinics were set up in the 1970s and 1980s and this is a problem throughout the region because standards are generally quite low.  In the whole region we have only around 30 JCI accredited hospitals and Kuwait has only one JCI credited hospital out of about 70. The private sector is making changes because they want the public to have a better perception of what is on offer and they are keen to keep patients in the region but there is no government regulation to encourage any hospitals to get accreditation. 

The various governments know they could be doing a better job, there’s a lack of high quality facilities and also of healthcare education and the population suffers as result.

On the other hand here in Kuwait, we have best primary care access in the world, there’s a strong density of primary healthcare with round the clock access and you can get to see a GP within 5 minutes and all services are free for locals.  The problem is that the system breaks down for secondary and tertiary care which is not as good.

Where do you fit in?

We are focused on assisting clients invest in healthcare assets that are undervalued or finding healthcare companies looking for growth capital and help them grow their platform in different geographies or grow their current services.

Even though we work with investors and healthcare operators our main mission is to improve the quality of care because we believe this is the only way to improve the overall quality of healthcare services throughout the region.

Are you venture capitalists?

No were financial management specialists that work with investors. We work with large institutional investors who are looking for sustainable long term projects and it doesn’t get more sustainable than a hospital. We also work with private investment companies who are looking to diversify their portfolio. We identify and source opportunities for our investors and do due diligence and then also help them execute the mergers and acquisitions and implementations or if existing project manage the entity and create enough value.

How has the global recession affected your business?

It has actually been a positive vector for healthcare we noticed that the recession has shifted a lot investment attention to our sector. Before the recession it was hard to convince clients to invest in something that would only provide a 10% return in three to five years, now investors realise that the real estate boom is over they can see the advantages of investing in a more stable product with a consistent return.

How do you create value for your clients once they have invested in a hospital?

We get involved in the managerial and operational turnaround and we provide new senior management which we generally recruit from overseas. 

Many of the hospitals in region and clinical systems are not really designed for efficiency and the infrastructure usually needs to be substantially altered.  Most of our hospitals in both the private and public system were built as a result of social responsibility and are not focussed on treating patients as efficiently as possible or with attention to patient care.

We also work with our investors to identify all the different processes in hospital and work to implement changes, structurally, clinically and administratively.  One of our biggest challenges and goals with all the hospitals our clients invest in is to change the mentality of the institution and to focus more on outcome and delivery of patient centric care.

How long does it take to turn around a hospital?

It typically takes from two to three years but all in all it takes five to seven years to really feel the impact of any changes we implement.

What are your biggest challenges and opportunities?

Greatest challenge in the region is basically the way we finance healthcare today. At the moment Governments finance it directly from the budget but they need to come up with new ways to fund healthcare. They talk about private healthcare insurance and this is the likely way forward but there also needs to be ways in which emergency services can still be funded by the government.  The secondary and tertiary services could be funded by the private sectors, and to do this a payment mechanism needs to be developed that helps refinance they system.  Additionally the healthcare providers need to take responsibility for healthcare in a way where the quality is measureable so that investors and insurance companies can see where there money is going and pay for performance.

What other challenges does the region face?

Probably the biggest issue that we are facing is lack of qualified nursing staff and leaders, it is a global issues but particularly problematic in this region.  We need to come up with better solutions. There’s been a sharp devaluation of the nursing profession in the region. In Kuwait they relocated the nursing school from the Allied Health University to the Vocational Training Institute; it has almost downgraded the profession. We need to get nurses more involved not only in care but in disease management, in the US there is a doctorate programme in nursing, because they are trying to bring back prestige to the profession which is the opposite of what is happening here. As a former doctor I understand the importance of nurses in clinical infrastructure and as an industry we need to figure how to keep this profession alive and well.

However, the most important thing for our country to address concretely is healthcare education.

What are the main healthcare problems in the region?

Chronic diseases is growing rapidly because of the affluent, sedentary lifestyle of most  citizens, 20 to 30% of the population of Kuwait is obese and it is in the top five countries for diabetes, the costs are very high, patients are more likely to be hospitalised and we need to educate people better so that they understand the consequences of their lifestyle choices and we want to promote preventative health in the Middle East.

How else are you working with governments in the region?

We are working with government on trying to address how to stop sending patients abroad.  If we improve the region’s healthcare infrastructure then it will be more efficient than sending patients abroad. There’s an important balance that governments need to strike so that citizens can get the best care possible in their own countries so we need to develop home based services that are sustainable for the future.

Eighty to 90% of all patients we send overseas are fully funded by the government, our constitution guarantees healthcare for all citizens and in recent times that’s come to mean that the best healthcare is overseas and patients know it will be funded by the government.  We need to change that. The government pays not only for their treatment costs, but also a daily stipend and almost all cases get a family member to travel with them to keep them company.  The average cost for sending patients abroad for treatment is between $150-200,000 per patient. Patients can request to be sent abroad for any type of treatment, including open-heart surgery and other major operations.  There are lots of patients travelling for IVF treatment and it is not unusual for these patients to be away for 3-9 months.

We cannot continue to send people to the best care in the world, it is too expensive, not sustainable and we should be able to provide top quality healthcare here but apart from the lack of infrastructure which we are working on our other problem is that we don’t have good medical schools or research centres which is another area that needs addressing.

Apart from working with investors and the governments of the region to invest in the infrastructure what other opportunities are you exploring?

We are very involved in setting up Islamic Healthcare Insurance a “Takaful”, which is different from traditional healthcare insurance. Takaful means cooperation and in Takaful companies the profit is sometimes shared back with the enrolees to the companies. There are all sorts of Takaful companies but we are developing a specialised healthcare Takaful in the region. Traditionally in a Takaful company the healthy pay for the sick and the young pay for the old. Communities used to pool their money together and pay for the sick and the needy. This is what we’re developing now, a specialised Takaful health insurance based on Islamic principals, it’s a project we are very excited about.

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Comments provided below do not represent the views of IMTJ. Comments will be published "as is" and will not be edited by IMTJ staff. IMTJ is hosting these comments, and is not  undertaking an editorial role in the content of these comments. However, it is editorial policy not to publish comments which have been submitted anonymously.

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Very interesting and information article. Will the Takaful insurance cover all of the population though? Is Kuwait going to introduce mandatory health insurance provision by employers?

Linda Marshall (16/01/2012 06:35:57)

Excellent article -- very insightful read on the challenges for the healthcare in the Middle East. Good luck with your work!

Murtaza Sutarwalla (11/01/2012 07:50:30)