According to the World Health Organization, Egypt’s highly fragmented health system “leads to difficulties in regulation and ensuring quality and standards of care.” Those “difficulties” are exacerbated by the system’s diverse array of public and private healthcare providers. It also makes consistent quality in healthcare services a major concern.
To overcome those challenges, President Abdel Fattah el-Sisi ratified a new law in June that was approved by the House of Representatives in May. It allows private investors to manage and operate public hospitals for three to 15 years while staying under state ownership.
According to Ahram Online, Minister of Health Khaled Abdel-Ghaffar said the law permits private investors to operate as many as 526 of 662 public hospitals.
Despite offering opportunities for investment and better services, the law raised concerns among the public in terms of accessibility and affordability. “Allowing [the private sector] to manage or operate existing public hospitals that offer services to low-income citizens would introduce a profit motive and make basic treatment unaffordable for ordinary citizens,” Doctors Syndicate head Osama Abdel-Hay told Ahram Online in May.
Egypt’s healthcare
As per 2023 figures by the data aggregator Statista, Egypt ranked 107th in the world for health and health systems. The ranking evaluates indicators that assess the population’s health and access to services, sickness and risk factors, and mortality rates.
The government is keen on improving those scores. This is reflected in the 2024/2025 budget as allocations for the healthcare sector were set to increase by 25%, reaching EGP 495.6 billion ($10.2 billion) annually, as revealed by then Finance Minister Mohamed Maait in April.
The government’s overall general health spending from domestic sources accounts for 33% of current health expenditures or only 1.5% of GDP, noted the WHO’s Egypt National Health Accounts Report 2023. That remains below the percentage approved by Egypt’s new constitution of 2014, which obliges the government to double spending on healthcare to 3% of GDP.
Failure to meet the mandated healthcare spending puts the public healthcare system under significant strain, requiring additional investment to fill the gap and meet growing demand. According to a Cleopatra Hospitals Group report in 2023, Egypt will need 38,000 new hospital beds by 2030, at an estimated investment of $8 billion to $13 billion, half of which is expected to come from the public sector.
Collaboration between the public and private sectors in healthcare can ease pressure on the government. A January blog post by the World Bank noted the “government can better harness considerable private resources and technology and shift some of the weight of healthcare investment from taxpayers to private investors.”
Win-win situation
With the new bill allowing outside management of about 80% of public hospitals, the private sector has a significant opportunity to leverage the country’s vast patient base. The private sector would help ensure healthcare demand is met, especially with the rollout of the universal healthcare plan, Hassan Fikry, corporate strategy and investor relations director at CHG, told Enterprise in 2021.
The World Bank’s blog post explained that working with the private sector could effectively cut costs, tap into specialized expertise, and boost efficiency. “Collaborating with the private sector can help governments in lower-income economies plug existing gaps in health services,” it said
Senior Adviser for Public Health Alaa Hamed noted in May that successful healthcare public-private partnerships (PPPs) in Egypt “require careful planning, strategic alignment, and rigorous evaluation.”
Hamed said that by adhering to guidelines and learning from global experience, “Egypt can maximize value for the money in healthcare PPPs, leading to sustainable improvements in healthcare delivery.”
Notably, private investments in FY2018/2019 in healthcare reached EGP 9.3 billion, around 42% of total investment in the sector, according to government figures in 2021.
In addition, the number of private sector hospitals increased by 20%, from 942 to more than 1,100 between 2009 and 2019, boosting their market share from 58.8% to 63.4%, according to local media sources in 2021.
In light of that, the government aspires to increase private sector participation in providing universal health insurance services from 30% to 50% and enhance competitiveness among service providers, Ahram Online said in June.
Once fully established, the universal health insurance system would reimburse private providers for services. According to the World Bank report, this would allow providers to serve lower-income patients who otherwise couldn’t afford high-quality care.
Widespread controversy
While, on paper, the setup looks promising, the public has voiced concerns mainly revolving around the fact private-sector healthcare providers work on a for-profit basis versus the government-services model of state facilities. A May article by Alternative Policy Solutions, a public research project, said the government’s new bill does not incorporate explicit conditions for pricing health services after transferring management to the private sector.
Egyptian Socialist Democratic Party Spokesperson Ihab Mansour told Ahram Online, the national newspaper, in May he fears public hospitals might “discriminate among citizens depending on who can pay and who cannot once private sector investors manage them.”
In that sense, a 2024 study by the Lancet Public Health on privatization’s impact on the quality of care also found that hospitals converting from public to private ownership tend to make higher profits.
This is mainly because of the selective intake of patients and staff reductions. “Aggregate increases in privatization frequently corresponded with worse health outcomes for patients,” said the study.
Accordingly, the new law needs to ensure effective regulations that benefit investors and keep high-quality services at affordable prices. “This condition is crucial to prevent investors from inflating the prices to maximize returns,” noted the article.
Another challenge is the massive turnover of doctors and nurses who work in Health Ministry-affiliated hospitals. According to Egypt Today, in May, the bill obliges the private administrator to keep only 25% of current medical staff, allowing the dismissal of the rest. This contradicts Article (69) of the Egyptian Labor Law, which prohibits the dismissal of public employees unless they commit gross misconduct.
Furthermore, the new law allows the hiring of foreign medical staff and lab technicians. Mahmoud Fouad, executive director of the Right to Medicine Association, noted, “The bill will lead to higher unemployment among Egyptian health workers and may exacerbate the already critical level of emigration by doctors,” according to Alternative Policy Solutions’ article.
Another associated risk could be Increasing the already high out-of-pocket expenses for uninsured or underinsured individuals. According to the WHO report, out-of-pocket payments have historically been higher in Egypt than in most peer countries, representing 59.3% of health expenditures in 2019/20
Universal health update
While the government has been pushing for the implementation of a universal health insurance system (UHIS) since 2018, the private sector should complement that effort.
In 2020, then Minister of International Cooperation Rania Al-Mashat said the universal health insurance project “encompasses mandatory coverage for citizens and unifies, for the first time, efforts with the private sector.”
She added the project targets achieving value for services, including those for the most vulnerable, by eliminating disparities.
According to World Health Organization stats, “more than 100 million people are pushed into extreme poverty each year due to out-of-pocket health expenses,” the WHO representative in Egypt said in August. “Achieving universal health coverage could reduce the number of people facing financial hardship by 30%, which would improve overall health outcomes and economic stability.”
The government’s plan is to expand health insurance coverage to 100% of the population by 2030, compared to about 66% in 2022, noted an article by Arab Finance in February.
However, six years after its implementation, the UHIS has lagged in its initial phase. Amnesty International reported that by 2023, the new healthcare scheme had been rolled out in only six governorates. The six-phase plan began in Port Said in 2018, extending to Luxor, Ismailia, South Sinai, Suez, and Aswan.
In the first-phase governorates, the government provided more than 31 million medical services to patients, said Ahmed El-Sobki, head of the General Authority for Health Care and director of the health insurance project, in November.
Ahram Online also reported medical teams in these governorates received 21,000 training programs, and 157 health facilities were accredited per international standards.
Maait also announced in December that funds and assets of the General Authority for Comprehensive Health Insurance reached EGP 91 billion, with total revenue of EGP 97.2 billion through June 2023.
In a bid to extend healthcare coverage across all governorates, President Abdel Fattah el-Sisi instructed the government in September to expand the health insurance umbrella to include an additional 8.5 million people. This expansion targets beneficiaries of the Takaful and Karama programs and informal workers in the construction sector.
El-Sisi emphasized the importance of finalizing the construction and development of 30 hospitals and 500 medical units and centers as part of the second phase of the comprehensive health insurance system. This phase is set to cover the governorates of Damietta, Minya, Kafr El-Sheikh, North Sinai, and Matrouh.
This article first appeared in October’s print edition of Business Monthly.
