Adapted from Business Daily
By DAVID MUGWE Posted Monday, January 3 2011 at 00:00
Investors in private hospitals have rolled out multi-billion shilling expansion projects in the past 12 months as they position themselves to tap into the surging demand for quality health care from a growing population of middle income earners.
The Aga Khan University Hospital, Nairobi Hospital, Avenue Group, Coptic Hospital, Kenyatta University, and AAR Health Services have all launched major expansion plans that will see new branches opened and services broadened.
Five health care providers interviewed by the Business Daily said they plan to spend more than Sh2.5 billion on the projects, which are at various stages of execution.
The expansion drive comes at a time when the growth of Kenya’s health industry has almost doubled to Sh91.4 billion as per last year’s Economic Survey data from Sh51.4 billion in 2005.
“There will be significant economic growth in the coming years to make the expansion and improvements worthwhile,” said Avenue Healthcare’s executive director Diana Patel.
Kenya’s economic recovery gained pace at an annualised rate of 5.4 per cent in the nine months to September, compared to last year’s 2.6 per cent, according to the latest data from the Kenya National Bureau of Statistics. he health and social work sector contribution to the country’s gross domestic product declined marginally from 2.6 per cent in 2005 to stagnate at 2.5 per cent for the next three years.
The contribution increased to 2.7 per cent in 2009, when 320,000 workers were engaged in the private health business and 478,000 others earned a living in the public health sector, including facilities run by councils.
Bullish growth outlooks including one by the World Bank that Kenya was on the verge of an “economic boom” have spurred consumer confidence, emboldening the manufacturing and service sectors to bolster their capacities.
Kenya’s population growth rate of 2.8 per cent per year is also adding pressure to health facilities and opening new opportunities for entrepreneurs.
Avenue Group plans to spend at least Sh250 million in the coming year to set up clinics in Nakuru, Eldoret and Athi River and a new hospital in Kisumu.
It already owns the 70-bed Avenue Hospital in Parklands, two clinics in Nairobi and one each in Mombasa, Kisumu and Thika.
The 65-bed capacity general hospital earmarked for Kisumu will offer surgical, medical, maternity, psychiatric and paediatric wards, private rooms and a high dependency unit.
It will also host two operating theatres, x-ray, CT scan, lab and pharmacy services.
Ms Patel said Kisumu is “strategically placed to be a centre for East African Community trade and medical tourism.” Coptic Hospital is building an eight-floor unit, complete with a helipad, on Ngong Road in Nairobi at a cost of Sh400 million.
The 157-bed hospital will have ICU, HDU, Dialysis, CT scan, MRI, pain management, seven theatres, surgical wards, a maternity and two laboratories.
The new facility is expected to triple Coptic’s current capacity, which had seen the service provider refer patients to other hospitals, said Bishoy Maher, a member of the committee steering the expansion.
The hospital is run by the Coptic Orthodox Church Mission in line with a trend where religious groups and charitable bodies provided subsidised health care until cost sharing was introduced in public hospitals in the early 1990s, attracting interest from profit-led investors.
Aga Khan University Hospital plans to spend up to $6 million (Sh480 million) expanding and upgrading its facilities with another $5 million (Sh400 million) being invested in manpower development.
Chief executive Asmita Gillani said a heart and cancer centre under construction at a cost of about $50 million (Sh4 billion) would be opened next year, stemming the tide of East African patients seeking treatment abroad for terminal illnesses and lifestyle diseases.
“Such services have not been available in the region before,” said Ms Gillani.
Kenyatta University is also building a teaching and referral hospital expected to ease congestion at Kenyatta National Hospital (KNH) and other health facilities in the wider Kiambu region.
The six-level hospital will cost at least Sh100 million. The University hospital will have a doctor’s plaza, maternity, medical and surgical wards, an aircraft landing base and will provide surgery services, paediatrics, obstetrics, gynaecology and dental services on an outpatient basis.
It is expected to be completed three years after commencement. Kenyatta National Hospital is the only other referral medical centre in the Nairobi Area.
Private equity financiers are also seeking a slice of the growth in the Kenya health sector, injecting more than Sh1 billion in the past two years.
In 2008 TBL Mirror Fund BV bought a significant stake in Meridian Medical Clinics at an undisclosed fee.
In early 2010 Aureos Capital bought a stake in the Nairobi Women’s Hospital for Sh200 million, while Acumen Fund is believed to have equity interest in a local medical provider.
Mater Hospital chief executive John Muriithi said building of new hospitals and opening of outpatient clinics was being driven by increased demand from patients in search of quality service.
“Existing hospitals are unable to cope with increased demand because the rate of building of new facilities is slow,” said Dr Muriithi. Mater has opened a branch in the city Centre and Buru Buru and Dr Muriithi said it is also expanding its existing theatres and bed capacity.
Top-end hospitals in Nairobi have revamped their facilities while opening branches in residential areas as they seek new revenue streams.
Gertrude’s Children hospital now has seven outlets from four years ago, while Meridian Medical Centre says it is also planning to add on its 10 health centres and one hospital by expanding into residential areas and in the east Africa region.
“Most of the middle class in Nairobi is able to afford health care but there are not enough facilities,” said Dr Peter Wambugu, the chief executive of Meridian Medical Centres.
The Nairobi Hospital is also planning to open two branches in Gigiri and Langata, besides expanding its main facility, with new technologies central to the drive.
“The outpatient clinics are to serve our clientele so that they do not have to come to the main hospital for a common cold,” said Dr Cleopa Mailu, the chief executive..