HEALTHCARE IN THE GCC: A SNAPSHOT - IIR Middle East

Healthcare
in the GCC:
a snapshot
Article written by Informa Exhibitions, Life Sciences
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HOSPITAL BUILD & INFRASTRUCTURE magazine issue 3 2012

SNAPSHOT GCC
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The GGC HEALTHCARE market
While markets across the globe and the Gulf were facing troubled economic
times, the GCC member states (UAE, Saudi Arabia, Qatar, Bahrain, and
Oman) has witnessed a shift in the profile of the healthcare market. An
ageing population, rapid urbanisation and lifestyle diseases such as diabetes,
cardiovascular problems and obesity are on the rise in the Gulf and through
the oil-driven economic boom, increased disposable incomes and spending
also increase the demand for healthcare services. In 2007, McKinsey and Co.
calculated the GCC healthcare expenditure to reach a total of US$60 billion
by 2025; most probably an underestimate considering how both the Kuwaiti
and Saudi healthcare budgets, for example, are growing.
The GCC healthcare market is projected to grow at an annual rate
of 11% by 2015 with Saudi Arabia and UAE being the fastest growing
markets. The demand for the number of hospital beds is expected
to be 93,992 in 2015, a more than 10% increase in beds from 2010.
This is in line with the current GCC average but below the US and
European numbers. The demand is also down to the increasing
insurance penetration in the GCC, which will result in an increase of
patients opting to stay in their home country for treatment, leading
to a higher demand in hospital beds. At the moment, due to the lack
of beds and qualified healthcare professionals, some GCC countries
send as many as 10% of all inpatients abroad for emergency care.
For example, in 2009 alone, the UAE spent US$2 billion on overseas
medical treatment for its citizens. Turn to page 12 to read more about
the specific GCC countries and their plans for the future.
Healthcare challenges in the region
Healthcare standards in the GCC are constantly improving. Factors such as
infant mortality and life expectancy at birth continue to improve, but the
main issue behind the increase in GCC healthcare costs, is the sedentary and
unhealthy lifestyle many people in the Middle East live. The GCC is widely
recognised as one of the most obese regions in the world, with close to two
thirds of the entire adult population of the Middle East being overweight.
Recent studies suggest that obesity is more expensive to the healthcare
system than smoking, with obese patients tending to spend 2-3 times as
much as the average patient on healthcare. The link between obesity and
type 2 diabetes is also evident by the high percentage of adults in the GCC
that suffer from type 2 diabetes. Saudi Arabia has the fourth highest rate of
diabetes globally at about 22%, while Kuwait and the UAE are also in the
top 20. A type 2 diabetes patient is four times more likely to be hospitalised,
equalling a huge burden on health budgets. In the UAE for example, chronic
lifestyle diseases and injuries cause almost 90% of all deaths.
The shortage of medical professionals is another major problem in
the GCC. There are very limited medical education options in the region
and healthcare organisations depend on expatriates, which accounts to
40-80% of the total workforce. Currently around 20 qualified physicians
serve every 10,000 people, compared to approximately 27 doctors in
the US and UK systems indicating a shortage of about 180,000 specialists.
According to WHO, the MENA region has 3.5 dentistry staff and 28.4
nurses per 10,000 people, which is nearly 79% and 71% respectively
lower compared to the US. Another issue contributing to the rise
in healthcare cost in the the GCC is the increasing use of new and
advanced technologies because of education, health awareness and also
the rising affluence of the population. Studies reveal that the use of new
medical technologies can increase healthcare costs by 38-62% and is
often not covered by insurance providers.
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WAYS TO REDUCE HEALTHCARE COSTS
Accountable Care Models
Accountable Care Models are being tested across the GCC
to help reduce healthcare costs. Dr Al Razouki, CEO of Kleos
Healthcare Corporation in Kuwait explains: “Certain clinical centres
of excellence in Saudi Arabia are piloting an interesting initiative
whereby physicians are actually made aware of the costs of
procedures and prescriptions before prescribing their treatment to
their patients through a computerised physician order entry (CPOE)
system that prints out the associated cost of the procedure or
prescription. This has a dual effect: A) physicians are less likely
to prescribe useless tests and psychological placebo medications,
thereby reducing the cost burden on their respective department
and B) patients, who do not even pay a simple co-payment and
are used to receiving both the treatment and prescription for free,
are made aware of the ‘value’ of the service the government is
providing them”.
The PPP’s
With governments in the Middle East struggling to keep up with the
unsustainable demand on healthcare, can Public Private Partnerships
(PPP) help ease the burden? “We are witnessing governments in
the GCC focus more and more on the healthcare industry in their
respective countries, improving structure and facilities. However,
governments are facing many challenges in doing so, with many
turning towards PPP, to aid in the transfer of quality service to
raise the level of healthcare provision across the region”, said Julian
Hawkins, Partner in Charge for Consulting Services at Deloitte Middle
East, knowledge partners of the 2012 edition of Hospital Build &
Infrastructure Middle East. A successful PPP has been proven to
save governments as much as 25% on healthcare costs. In the UAE
for example, where the government is still footing 70% of the total
healthcare cost, has been encouraging the participation of the private
sector and development of PPPs in order to develop both hard and
soft infrastructure. Abu Dhabi is a driving force in the development
of PPP’s and is based on management partnerships with some
major international hospitals such as Varned, Cleveland Clinic, Johns
Hopkins and Bumrungrad.
WHAT NEXT?
In order for the medical industry to flourish in the GCC, the healthcare
infrastructure must be improved through a regulatory structure, the
development of strategies to attract and retain professionals, as well as
writing action plans for the development of facilities. “Governments in
the GCC should play a more pivotal role in the healthcare sector, to
enhance its reach and services in their respective countries”, said Mr
Hawkins. “In addition, there is a growing need for augmented medical
facilities and improved medical insurance, for a stronger healthcare
market. Public Private Partnerships will surely aid in the development of
the sector”, he added.
In short
• Complications due to lifestyle diseases cause huge financial and
social burden on an already over-stretched healthcare system
• Public Private Partnerships are used to help ease some of the
financial burden on GCC goverments
• The acute lack of qualified medical staff is a worry in the region,
with some professions lacking 70% in numbers compared to the
West.
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Hospital build & infrastructure exhibition and congress 2012
On June 4 th this year, His Excellency Abdul Rahman Mohammed Al Owais, Minister of Culture, Youth and Community Development and the
Acting Minister of Health officially inaugurated the 4 th edition of Hospital Build & Infrastructure Middle East Exhibition & Congress. The event
is the only one in the region dedicated to bringing investors, commissioners, backers and managers of major healthcare projects together
with the suppliers of the best services in architecture, planning, design, construction, operations, management, and refurbishment under one
roof. This year, the show experienced a 30% increase in exhibitors from 2011 with 86% of the exhibitors agreeing that Hospital Build &
Infrastructure Middle East is very important for their marketing activities in the region. Over the course of the three days of the show, more
than 5,000 visitors walked through the doors with the majority looking to get some general information and to keep up-to-date with new
products or trends in the region. A quarter of all visitors also took the opportunity to meet up with their existing suppliers.
In addition to the 7,560sqm exhibition, eight successful conferences took place over the three days covering topics such as: Hospital
Design & Upgrade, Leaders in Healthcare, Imaging & Diagnostic Management, m + Health, Surgery Management, Healthcare Management,
Quality, Standards & Accreditation in Healthcare and the new Architect’s Congress. Highly regarded industry professionals shared their
knowledge at the conference that saw more than 600 delegates taking part.
Kuwait
The Kuwaiti Ministry of Health has recently announced a budget of US$4
billion for 2012-13, a 100% increase from the US$2 billion budget five
years ago. This accounts for more than 80% of the healthcare spending
in the country. The government is currently operating 15 general and
specialised hospitals with the private sector expected to grow moderately
in the coming years. Private companies are estimated to take a share of 15-
20% of the healthcare spend, but due to the global economic downturn,
investment in the sector has been affected to some extent. Currently,
Kuwait has 19 hospital beds per 10,000 people, an undersupply of serious
concern given the population growth and the growing disease burden.
Although the population is young on average, obesity and related chronic
diseases is a huge issue in this small country. For example, obesity levels
have reached 80% in women and 70% in men. In January 2011 it was
announced that the government was working on a strategy to bolster the
healthcare system with 3,500 beds, new laboratory- and surgical facilities.
Kingdom of Saudi Arabia
Saudi Arabia is the largest healthcare market in the Middle East. The Ministry of Health is
responsible for close to 75% of healthcare services, with a budget this year of US$13.5 billion
not including a further US$4.3 billion for the large healthcare cities projects spread across the
Kingdom. This results in a grand total of approximately US$18 billion in Saudi healthcare spend.
If you add another 25% for other healthcare providers, both government and private, the total
Saudi healthcare budget is approx US$21.3 billion for 2012-13. At the moment, the MoH owns
and operates 60% of all hospitals in the Kingdom, but KSA is an attractive market for healthcare
investors due to the rapid growth in market size, the demand for hospital beds, with a young,
affluent population suffering from lifestyle diseases. Aided by a large budget surplus, the public
sector is set to make large investments to support healthcare provisions and complimentary
sectors such as scientific research. These kinds of investments will require strong Public Private
Partnerships and a strong private sector presence overall. Despite the heavy investment in the
healthcare sector, compared to the West, Saudi Arabia demonstrates a severe lack of doctors,
nurses and hospital beds with the lowest numbers per population within the GCC.
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Bahrain
The healthcare market in Bahrain has been witnessing robust
growth over the past few years. With the recent troubles in
Bahrain, the local authorities has realised that money must be
spent on basic infrastructure such as healthcare to ease the
demands of the growing and ageing population. In the next five
years, the demand for the number of hospital beds is expected
to expand to 2,367 from an estimated 2,167, a CAGR increase
of almost 2%. Healthcare in Bahrain is mainly provided by the
Ministry of Health public facilities. Projects, such as the King
Hamad General Hospital and the construction of a one-of-a-kind
health island, are expected to improve healthcare infrastructure as
well as boost medical tourism in the country.
Qatar
The healthcare system in Qatar is set to undergo major
development in the coming years. With the healthcare market
expected to expand at a CAGR of 8.4% between 2010-2015 to
US$3.2 billion, up from an estimated US$2.2 billion. Qatar has
the highest per capita healthcare spending in the GCC. Currently,
35 healthcare programmes, ranging from a mandatory healthcare
insurance scheme to the configuration of hospital services, are
in the pipeline. The main reason for the increasing demand on
the healthcare system in Qatar is the rapid growth in population,
especially amongst expatriates due to the 2022 World Cup, and
the founding of the mandatory insurance scheme. The Qatari
government has got a clear direction and strategy of how to
improve the healthcare system in the country and the public
healthcare provision is very strong. However, the overall market
size is small due the limited population numbers and with the low
medical insurance penetration, these are areas of development.
United Arab Emirates
According to Deloitte’s latest survey, the UAE healthcare
sector has witnessed rapid development over the past few
years and has weathered the global financial crisis relatively well.
Despite the economic slowdown, the UAE has attracted major
international healthcare investors and the UAE government is
increasingly focusing its efforts on attracting prestigious private
healthcare providers to the country. The healthcare spending
per capita remains high, driven by outpatient services, higher
awareness levels and overconsumption of healthcare services by
insured patients. 24% of the federal budget in 2011 was spent
on social and healthcare development with the total healthcare
spending projected to nearly double by 2014.
Oman
Oman is now one of the world’s most advanced healthcare nations and the healthcare
market is predicted to be worth US$2 billion by 2015 as a result of population growth, rising
levels of lifestyle-related diseases and increased health insurance. The nation’s 2011-2012
budget allocated more than US$870 million for healthcare services, an increase of 14.2%
year on year. Currently the Omani government operates the key hospitals, but private
sector participation is on the rise and private expenditure rose from 17.5% in 2007 to 21.2%
in 2009. There’s a plan to develop a healthcare city near Muscat with an estimated US$774
million-1 billion to attract medical tourists from western as well as other Arab countries.
Source: Deloitte & Touche (ME) 2012
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