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Boston hospitals recoup millions in debt from Kuwaiti government

The Dana-Farber Cancer Institute was owed $20 million.Craig F. Walker/Globe Staff

As the coronavirus pandemic pummeled hospital finances two years ago, some of the state’s most prominent health care institutions were facing another multimillion-dollar financial challenge: the country of Kuwait’s persistent failure to pay its hospital bills.

The hospitals — including Mass General Brigham, Dana-Farber Cancer Institute, and Boston Children’s Hospital — have longstanding relationships with the country, which offers universal health care and pays for its citizens to receive treatment abroad with technologies and expertise not offered at home.

But by 2020, Kuwait’s bills had begun to stack up. US congressional officials said that Kuwait owed 45 US hospitals $677 million, dating back to 2018. Dana-Farber was owed $20 million. Mass General Brigham said it had a $45 million outstanding balance.

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The hospitals banded together and, with help from Congress and the State Department, collected the money at the end of 2020 — a fact not publicly disclosed until last month, when Dana-Farber’s 2021 financial statements became available.

“We started using the tactics we have at our disposal,” said Michael Reney, Dana-Farber’s chief financial officer. “We called the State Department. . . . We involved our senators. We worked across hospitals in Boston and then with others across the country.”

In a written response, Kuwait Ambassador Salem Al-Sabah acknowledged the payment problems. Yet he said safeguards had been put in place to prevent any future payment delays to US medical institutions, with which the country annually spends between $200 million to $300 million for medical care.

“The State of Kuwait has had a temporary and unfortunate setback in 2018-2019 concerning the delayed transmittal of the owed payments,” Sabah said. “That delay then was exclusively due to bureaucratic procedures internal to the Ministries of Health and Finance in the State of Kuwait. In 2020 this matter had been swiftly resolved and the Government of Kuwait paid all outstanding debts, notwithstanding extraordinary pressures imposed on the Government by the COVID-19 pandemic.”

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Medical tourism is common for several countries in the Middle East that have government-funded health care systems, including Kuwait, the United Arab Emirates, Qatar, and Saudi Arabia. While bill repayment is typically slow, sources said, it rarely falls so far behind.

The Kuwaiti Ministry of Health sent 7,800 patients abroad in 2018, the most recent year for which data is available, at a cost of approximately $1.1 billion, according to the International Medical Travel Journal. Of that, 24 percent went to the United States. In 2020, the US Cooperative for International Patient Programs reported that Kuwait ranked fourth — behind Canada, China, and Mexico — in the number of adult patients it sent to the United States and first in the number of adult inpatient cases it sent to the United States.

It was unclear how many of those patients come to Massachusetts, and hospitals declined to specify.

Though international tourism represents a small percentage of the overall revenue for most hospitals — at Dana-Farber, it made up approximately 3 percent of revenue before the pandemic — the payments presented a problem for hospitals reeling from losses due to COVID. Dana-Farber started to write down losses on the debt in fiscal 2020 over concerns the money wouldn’t be collected, adding a $9 million loss to its $8.4 million operating loss.

Kuwait’s problems with international payments date back to 2017, according to the International Medical Travel Journal. Kuwait’s Parliament started investigating allegations that officials were using medical treatment as a way to siphon public funds for travel abroad. the journal reported. The minister of health then endorsed regulations to reduce the cost of sending Kuwaitis oversees for medical care. That same year, several US and European hospitals stopped accepting Kuwait government-funded patients due to nonpayment.

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Complicating debt collection were problems with the Embassy of Kuwait in Washington, D.C. , which experienced massive turnover, Reney said. A payment agreement was reached with new staff, and then COVID hit, delaying the payment another nine months.

Reney began to call other hospital executives, discovering the problem was larger than just one institution.

“Kuwait stopped paying everybody. And really their embassy structure kind of fell apart,” Reney said. “It was good for us that they stopped paying everyone because we all got together and used the federal government to help us.”

The US Cooperative for International Patient Programs — of which MGB, Dana-Farber, and Children’s are members — reached out to the Massachusetts congressional delegation in the summer of 2020 to increase the political pressure on the payments. Staff in Representative Jim McGovern’s office said that, within the month, McGovern filed a “sense of Congress” amendment calling for immediate repayment. Several Massachusetts representatives as well as those from California and Ohio signed on.

“The Kuwaitis say this matter is pending in their Parliament. But that’s what they said last year. And the year before that,” McGovern said in comments made on the House floor that July. “It is my understanding that the State Department has been respectfully trying to resolve this matter, but Kuwait continues to drag its feet. This lack of responsiveness and accountability is very frustrating.”

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Reney said the hospitals also worked together to deny attempts from the Kuwaiti government to negotiate the bills down by promising faster payment to some institutions than others.

“We all were talking to each other and we said, ‘Don’t take that deal. They owe us the whole thing.’ And so I think most people honored that,” Reney said.

The pressure was successful. Officials from Dana-Farber, MGB, and Children’s said Kuwait paid the bills in full in December 2020. And it hasn’t fallen behind since.

“We and they work hard to stay within our agreed payment dates,” said Doug Vanderslice, chief financial officer at Boston Children’s. “At this point, that relationship is working as we’ve agreed.” Children’s declined to specify how much Kuwait owed it in 2020 from patient care.

Niyum Gandhi, chief financial officer at Mass General Brigham, said the institution owed a particular debt of gratitude to McGovern, Senator Ed Markey, and the entire Massachusetts delegation.

“We are thankful to the Kuwaiti government who resolved this issue so that we may continue care for patients in Kuwait who need us,” Gandhi said in a statement.

Reney said the hospital is now requiring that the government repay its debts within six to eight months, and has threatened to escalate problems sooner with country leadership in the event things fall behind. The hospital also recognized a $9 million gain in fiscal 2021 to offset the reserve held in the prior year.

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Jessica Bartlett can be reached at jessica.bartlett@globe.com. Follow her on Twitter @ByJessBartlett.