Introduction
Egyptian Health Minister Khaled Abdel Ghaffar hinted at the topic of privatizing government hospitals during a meeting with the Chamber of Private Sector Healthcare Providers in 2022. This was followed by President Abdel Fattah al-Sisi’s announcement, in his 2023 Sohag speech, that Egypt would approve 10% of private sector acquisition and investment requests in the healthcare sector.
The privatization of the medical sector is not new to this regime and dates back to the era of former President Mohamed Hosni Mubarak in the early 1990s, when the International Monetary Fund and US Grant Foundation recommended removing healthcare subsidies and liberalizing the state’s management of healthcare. Then, in 2007 the State Council ruled that privatization of the healthcare sector was unconstitutional, pointing to the constitutional right of citizens to receive humane healthcare and treatment from state medical institutions. However, with Egypt borrowing from the World Bank in 2015 and the government selling off state assets such as medical institutions, the question becomes: How did the state embark on the privatization of the medical sector? And what is the state’s strategy for implementing the World Bank’s conditions of reducing the amount of spending on the public healthcare sector and outsourcing healthcare services to the private sector?
The researcher believes that the state’s general approach to privatizing the public medical sector is characterized by confusion and lack of clarity, based on the inconsistency between official statements and state practices that do not follow the neoliberal approach of the international lending institutions, nor the Nasserist socialist legacy of the state providing medical care for its citizens, despite its structural and material deficiencies, as stated in official speeches by the Ministry of Health and the president of the Republic.
This confusion is evident in the state’s announcement to sell 10% of medical institutions to the private sector in accordance with its commitments to the World Bank, while still guaranteeing citizens’ right to medical care. However, it sold a majority of hospitals located in the areas that service low-income people. The government also violated the constitutional spending ratio on healthcare and assigned many hospitals to the Ministries of Defense and the Interior instead of selling them to the private sector.
This paper’s analysis of the government’s policy of privatizing the medical sector is based on the epistemological approach of the ruling elite. The researcher analyzed the government’s statements to deduce and understand the coherence of the elite’s rationale and its commitment to it and to find out the extent to which the state is honest, without using the neoliberal reference to achieve other hidden goals and objectives, especially in the absence of the democratic practices of transparency, control, and participation in making and implementing public policies.
Healthcare Sector Deterioration as Justification for Privatization
In order to understand the state’s approach to the privatization of the medical sector, we need to first understand the activities and events in this sector and the overall provision of medical services in Egypt.
The topic of the healthcare sector and universal health insurance has been addressed as part of the ongoing national dialogue between the government, opposition parties, and nongovernmental actors. In line with the World Bank’s and donor countries’ recommendations to liberalize the healthcare sector and reduce subsidies, the government announced its intention to gradually implement the Universal Health Insurance Law from 2018 until 2023; it requires the user to be a subscriber to the system and pay a contribution, with the state covering contributions for those unable to pay, and had the goal of gradually eliminating state-covered treatments over the course of the program’s implementation. This project is intended to transform health insurance into an economic entity funded by the salaries of workers and employees as a profit-generating service, with deductibles to be reviewed and contributions reassessed every five years. However, the state can withdraw any service or increase its price in the event of a financial deficit or an increase in market prices. The project also stipulates contracting with public and private hospitals and units to provide healthcare services, after ensuring that they meet quality standards, which means that many hospitals will go out of business due to their sale to the private sector.
Although Egypt has adopted public health insurance since 1964, as part of a social welfare program and the state’s concern for workers, it has not succeeded in expanding to many governorates in Egypt due to financial, administrative, and structural deficiencies that are still inherent in the public healthcare system and prevent it from including new categories of beneficiaries, especially low-income citizens. We find that the healthcare sector suffers from deep-seated issues. The number of doctors licensed to practice medicine under retirement age locally has reached 23,000, of which only 42% work in the government sector; meanwhile, there are 100,000 Egyptian-licensed doctors working abroad.
The issue of doctors’ migration has worsened with the increase in their resignations due to the lack of appreciation for their services, with an estimated 4,261 resignations in 2022, compared to 1,044 in 2016 and 2,068 over the past seven years. Attacks on doctors have been rising and they receive poor financial compensation, given that a doctor’s monthly salary is 3,600 Egyptian pounds, equivalent to US$116. In addition, there is a lack of learning opportunities for doctors to gain experience through practice and practical training in university hospitals. There is also a lack of post-university study opportunities, which explains why the number of doctors enrolled in postgraduate studies has dropped to 50% of usual enrolment rates, causing an accumulated deficit, not to mention the increase in study costs by about 15,000 pounds per year, equivalent to $455. Despite these shortcomings, the government has opened new medical schools but without a training hospital, increasing the number of medical graduates without increasing their training capacity, as there are no university hospitals or faculty members and human resources to operate university hospitals to train them.
This spending shortfall is a broader issue. According to a 2020 study by the Egyptian Center for Economic Studies, the percentage of total healthcare spending fell from 6% of GDP in 2015-2016 and 2016-2017 to 1.2% in 2018-2019 and 2019-2020. According to the center, the government manipulates its data and statistics to calculate the expenses of the Sanitation Authority and the army and police hospitals, knowing that the patients of those two bodies are not equal to the average citizen. As a result of the decrease in public spending, there has been a decrease in the number of hospital beds, from 98,319 in 2011 to 88,597 in 2020, while the number of beds in the private medical sector increased according to the 2020 healthcare services census. The total number of beds across the healthcare sectors has not changed: 124,307 in 2011, 128,344 in 2019, and 123,617 in 2020.
The number of government hospitals reached 643 in 2011 and 691 in 2018 but declined to 662 in 2020. This number was in addition to the 522 treatment institutions belonging to integration hospitals, which emerged in 1997 as an intermediary solution for urgent medical issues and a secondary means of diagnosing patients and receiving treatment to alleviate some of the pressure on larger hospitals. However, they stopped operating due to a shortage of doctors and the Ministry of Health’s centralized hospitals.
Egypt has eight private medical schools, 14 private colleges, and 27 public colleges, all of which suffer from a planning crisis. Hospitals are not geographically distributed according to the needs of the regions, and there is poor distribution of doctors. Central hospitals have 100,000-200,000 beds in a governorate with a population of 200,000-500,000. There are also "white”, or empty, areas where there are no doctors of certain specialties, according to the 2021 Human Development Report.
While the state spent 7 trillion Egyptian pounds (approximately US$148 million) on development and infrastructure projects, the private sector contributed 71% of healthcare spending. The state directed 52% of the Ministry of Health’s budget to workers’ wages and 10% to subsidies, grants, and social benefits, with Egyptians contributing 62% of total healthcare spending in direct payments, which is double the global average. The ministry provides medicines and medical supplies at the request of hospitals. Yet the Ministry of Health shirks its responsibility for the deterioration of these hospitals: its privatization project does not provide any solutions for substandard hospitals, nor does it clarify the status of their workers.
Privatization and the Constitutional Right to State-covered Healthcare
The Ministry of Health announced in 2022 that it would put five hospitals up for sale – with the potential list including the Coptic Hospital, Agouza, Heliopolis, Sheraton, Galala, Dar al-Shifa, al-Gomhouria, Mabaret Misr al-Qadima, and Mabaret Maadi – to provide some liquidity enabling it to pay debts amounting to 1,655 trillion pounds. This plan would work in conjunction with proposals from the Ministry of Health and the General Authority for Investment regarding regulations for approving mergers and acquisitions in the healthcare sector.
In the end, the UAE’s Abraaj al-Emarat (Abraaj Laboratories) bought the Cleopatra, Cairo, Nile Badrawi, Nakheel, and Nazha International Hospitals, raising concerns from the Doctors Syndicate, the parliamentary health committee, and Right to Medicine initiatives that companies buying hospitals, such as Abraaj Laboratories, would thus control the price of healthcare services and lead to the failure of the universal health insurance system. They also expressed their fear that privatization would be seen as a way to carry Egypt’s economic crises into the future in exchange for new revenues to help the government cope with its internal and external debts. As the economic crisis worsened and the public debt reached US$164 billion, the state turned to expanding spending on infrastructure projects, transportation, and urban expansions such as the construction of the new administrative capital as a long-term investment plan to enable the government to pay public debt services.
With the economic growth rate dropping from 7% to 4%, the healthcare sector was not a high priority for the state, which has replaced the expansion of healthcare spending with health awareness campaigns as vertical health programs to highlight the government’s achievements and successes; this has resulted in holding the private sector and civil society organizations almost entirely responsible for the treatment of low-income citizens, such as the “Mit Milyon Sahha” (Abundant Health) campaign, the elimination of hepatitis C, and the Bahia campaign for regular breast cancer screenings.
If we look at the project to privatize the healthcare sector under President Sisi, we will find that it is an extension of the government’s policy under Mubarak, with a difference: Mubarak’s announcement to transform health insurance into a holding company as a first step to privatization was nullified by the judicial victory of the citizens’ right to humane healthcare and the inherent duty of the state to guarantee it. This decision canceled the president’s decision, as a fundamental human right core to one’s right to life should not be subject to trade and market laws. The State Council’s ruling invalidating the decision stipulated that the state’s guarantee of healthcare prevents this right from being turned into a field of investment, bargaining, and monopoly, recognizing, “The constitutional duty of the state prohibits it from reneging on it under the pretext of development, budgetary shortfalls, and other reasons used by the administration to achieve objectives that render this duty meaningless.”
Now, despite the legal argument and precedent, the government has pushed ahead with the privatization of the medical sector, to the point where financial acquisition in this sector ranks second out of all Egyptian economic sectors. Putting the hospitals of the Therapeutic Corporation up for sale, despite their success and self-sufficiency without receiving any state support, has become just one more stop in the privatization of healthcare services, turning medical care from a constitutional duty into a commodity.
The government is currently trying, through the Sovereign Fund of Egypt, to bring as many large companies as possible under its control, such as Misr Insurance, Arab Contractors, Ezaby Pharmacies, and others. State-owned assets are being sold to fill a funding gap of about US$17 billion. In preparation for the sale of state assets in the healthcare sector, the government announced the independence of integration hospitals and the transformation of 45 other hospitals into women and children’s healthcare centers in nine governorates in Upper Egypt, as well as the transformation of nine other hospitals in eight governorates into healthcare technical institutes. Twenty-four integrative hospitals have been converted into health insurance offices and 22 others into primary healthcare services. These hospitals provide affordable treatment to around 350,000 Egyptians annually and were renovated, upgraded, and equipped in 2021.
The Cabinet also issued a decision to establish a mandatory training authority for doctors to improve the level of clinical medical training, but it does not address the lack of practical training for the internship year; it aims first and foremost to liberalize healthcare services by opening the door for doctors of any nationality to compete with Egyptian doctors for job opportunities, which is part of the plan to liberalize services as part of the General Agreement on Tariffs and Trade agreements. Although Europe, Canada, and other capitalist countries support the private sector and entrust the provision of services in various fields to it in a free competitive market, the state’s retention of the public healthcare service in Britain has enabled the country to face Covid, while 50,000 Americans die every year due to lack of insurance coverage. Clinics and hospitals make up a large part of the private sector in France. However, the French government is still responsible for covering 80% of costs through nonprofit, state-owned insurance companies, with the individual bearing only up to 30%, depending on income and ability to pay; the state eliminates the contribution rate for citizens and residents in the case of treatment for chronic diseases. Insurance companies offer supplementary packages to cover the patient’s deductible, and employers provide insurance coverage for their employees. Thus, the role of the French government remains prominent in providing medical insurance while maintaining an incentive for the private sector to operate healthcare centers, with strict eligibility criteria for raising the quality of services. The French state spends 10% of its income on healthcare and intervenes in regulating this sector and assessing its quality; it does not leave it to the private sector, which could monopolize healthcare facilities and provide poor services at high costs.
In addition to the constitutional right to receive care and treatment from the state, opponents of privatizing the medical sector cited: the decrease in the number of hospitals in Egypt, from 1,446 in 2008 to 659 in 2014; their transformation into healthcare units in preparation for their sale; and the Universal Health Insurance Law requiring citizens to pay fees of up to 10% of assessed costs, even though they deduct a monthly contribution from their salaries to receive medical care.
The Doctors Syndicate Council opposed the privatization laws both legally and in the media. It warned that the multinational company Abraaj Al Emarat and its establishment law prevented the disclosure of its shareholders, placing a national security issue such as healthcare in unknown hands. This opposition was based on Articles 18 and 33 of the Egyptian Constitution, which prohibit the disposal of state assets, criminalizing the Ministry of Health’s opening the way for the privatization of the healthcare sector and integrated hospitals, and recognizing the constitutional right of citizens to receive adequate medical treatment and care at the expense of the state. The lack of government oversight of investment and private hospitals has led parliamentarians to question the prime minister and the minister of health about the Free Treatment Administration's lack of oversight of private hospitals, most of which have become investment projects aimed at profit rather than service provision. Privatization will raise treatment costs to levels beyond the ability of citizens who are currently able to afford treatment, especially since President Sisi began privatizing integration hospitals in 2017 in populous and rural areas that are most in need.
The draft amendment to the 2014 University Hospitals Act, which prepares them to be independent from medical schools and universities, also sparked the anger of the Doctors Syndicate, which considered turning hospitals into an independent healthcare unit a disaster, especially since the hospitals have no share of the general budget and most of them rely on donations. The syndicate saw the failure to increase the healthcare budget in the state budget as a confirmation of its intention to privatize healthcare services (the 2020-2021 budget included only 3.5% of GDP for healthcare, preuniversity education, and higher education, instead of 10% as stipulated in the constitution). The Right to Medicine Movement stated that Egyptian hospitals have changed since 2010, when the Ministry of Health decided to issue the Unified Regulation Law dividing hospitals into six categories in which the number of beds was determined. Once implemented, 60 isolation hospitals were taken out of service after they were converted into the inpatient departments of central hospitals; fever hospitals in Bahtim, Kharkanya, and Shebin al-Qanater were closed, not to mention the dilapidated infrastructure and lack of equipment in other hospitals such as Abbasiya and Imbaba.
Based on complaints from citizens about private hospitals draining patients’ pockets, the Free Egyptians Party and Parliament’s Health Committee condemned the private sector’s control over the prices of healthcare services and the failure of universal health insurance, submitting a briefing request and an urgent statement to the Ministers of Investment and Health, and declaring their refusal to compromise integrative hospitals, which are a haven for 50-60% of low-income people.
The Center for the Right to Medicine and the Union for the Right to Health also considered the decision to separate the university hospitals to be disastrous and the beginning of the privatization of the healthcare sector. These two organizations have also declared their rejection of privatization, claiming that healthcare is a national security institution that cannot be invested in, whether by buying government hospitals or pharmaceutical factories.
Privatization According to World Bank Conditions, or Outsourcing Hospital Management to the Army and Police?
The cabinet’s Information and Decision Support Center denied that the state was moving toward privatizing public hospitals after the implementation of the new Universal Health Insurance Law. The Information and Decision Support Center confirmed that investment in these hospitals would be through management or usufruct, and that offering the hospitals to investors was intended to manage some services, provide new services, or develop medical work and services. The center also noted that the goal of selling the hospitals was to increase private sector investment in the field of healthcare and direct the state to raise the level of healthcare services. The government also emphasized that the private sector was available to enter the health insurance system if it could meet the necessary conditions and demonstrate that it was focused on the health and safety of patients, developing the healthcare system, and raising its efficiency by developing its material and human capabilities in order to contribute to improving the service provided to citizens.
The Information and Decision Support Center pointed out that Care Egypt, the State’s holding company, was created to work in healthcare fields by managing hospitals and healthcare entities, establishing and maintaining hospitals, and handling the digital migration in support the success of the company’s plans to provide an advanced model of high-quality healthcare in Egypt capable of reaching high-level indicators. The authority works in an integrated manner with the comprehensive health insurance system and healthcare stakeholders and has nothing to do with the recipients of the service.
The government further justified its sale of some hospitals by stating that they belong to the “Curative Organization”, an economic body supervised by the ministry that has been providing services for a fee to the middle class since its establishment in 1964. The private sector will not acquire more than 10% of the medical sector in order to maximize its investments in the healthcare field as part of the state’s orientation toward raising the level of healthcare services, especially since the organization does not receive subsidies from the state and provides its own needs. The law leading to the creation of these “curative” hospitals originated in the governorates; they are renewed by a decree issued by the president, are legally established, are based in the capitals of the governorates, and provide treatment services at economic prices. The purpose of these institutions is to provide therapeutic services in the hospitals and the medical units affiliated with them, develop therapeutic treatments, and improve the level of treatment. The curative organizations are responsible for planning, supervising, and evaluating the therapeutic services conducted by these hospitals and units. Each therapeutic institution can set the general rules for remuneration for treatment services provided by hospitals and units; determine the general rules for contracting hospitals and medical units affiliated with them for institutions and companies and help hospitals and medical units affiliated with them in providing personnel, devices, and equipment.
The state also declared its intent to surrender financial management to the private sector and the utilization of medical institutions for up to 20 years, rather than selling them outright. It also directed the Ministry of Health to transfer the management of other hospitals to the army and the police instead of selling them to the private sector or offering them for investment.
In 2016, at the inauguration of the fourth phase of the Armed Forces Medical Complex, President Sisi announced that the government was instead looking into integrating the hospitals into the wider society and maximizing their use. In this context, former Health Minister Ahmed Emad announced in 2017 that the hospitals would be outsourced to the private sector, the police, the army, and investment. Accordingly, the Minister of Investment requested that 75 hospitals form the nucleus of the partnership with the services sector of the armed forces and the Ministry of the Interior. This inconsistency between the government’s statements and decisions has led to the fragmentation of the healthcare sector – which does not follow a unified, consistent, and integrated administrative and legal framework – while opening the door to corrupt practices so that citizens can prove their entitlement to free treatment at the expense of the state. In addition, profits from healthcare services are distributed to networks of interests and state supporters.
Despite this, the state is not making any real efforts to reform the healthcare sector, improve its performance, and provide services to its beneficiaries, especially with regard to the lack of transparency and clarity in the procedures and policies followed in privatization. For example, fees and taxes were collected for the new comprehensive health insurance which only covered four governorates with 80% of the population, and the fate of these collected taxes is unknown: a surprising fact since they amounted to 74 billion pounds (approximately US$156 million) according to a recent statement by the Minister of Finance. There is also no disclosure of the ways in which medical institutions were put up for sale, the amounts the state received in exchange for selling them, and how they were used to improve the performance of the healthcare service.
Recommendations
In the context of the apparent contradiction between the government’s statements regarding the privatization of the public medical sector according to the World Bank’s dictates and its actual decisions, we find that the state does not abide by its promises to achieve efficiency and improve the performance of medical institutions through privatization. It entrusts the management of many of these institutions to the army and the police, which contradicts the neoliberal approach to which the state pledges to adhere. It does not achieve efficiency in the performance of medical care, as there is no oversight of military and police-affiliated institutions, which opens the door to increased rates of corruption in healthcare institutions. The military has expressed its resentment of privatization and economic liberalization policies because they pose a threat to its status and profits from its abundant resources, tax exemptions, and free labor; this further reinforces the contradictions and confusion in elite policy in general and at the sectoral level, especially healthcare.
The study recommends a long-term political reform strategy of adopting more transparent and clear methods of privatizing the public healthcare sector through participatory mechanisms that would include people concerned with healthcare in decision-making that would be based on accountability, transparency, decentralization, the rule of law, a clear vision, and complete and accurate information. Accordingly, officials would be more credible regarding the rates of family coverage in the new insurance system, its referral rates from primary care to higher levels, the number of family doctors working in the governorates, and their financial payment system. The success of the privatization policy depends on the availability of information and transparency about its implementation, its stages, and the plans used to achieve it. The principle of monitoring the performance of executive bodies – especially in remote, marginalized, and poor areas – must be applied by forming patients’ rights committees in healthcare institutions and hospital boards of trustees, and reconstituting the Supreme Council of Health in a more effective and participatory manner. The Supreme Council represents those who are concerned, influential, and beneficiaries of healthcare services through an internal list independent of the Ministry of Health; it develops and approves policies and strategic plans for the healthcare sector, monitors the executive apparatus, and ensures that spending is limited and regulated, as well as that its membership is not profitable.
As part of the privatization approach, private sector healthcare services must be openly and competitively priced; a specific system must be established and announced; coordination and integration must be achieved; and a framework must be established to prevent conflicts of interest between the three bodies implementing insurance and define the relationship between the new bodies and the Ministry of Health. To achieve this, the role of the medical private sector in the new system must be defined – especially the roles of private insurance companies, service management companies, and the positions of the private sector and large investment hospitals – through a strategy that would ensure the private sector’s respect for the law in terms of fairness in collecting fees and contributions and quality of service and also taking into account coordination between government healthcare and the private sector to minimize the fragmentation of the healthcare system and achieve harmony between the private sector and government health insurance.
The views represented in this paper are those of the author(s) and do not necessarily reflect the views of the Arab Reform Initiative, its staff, or its board.
