Healthcare provision in the GCC states is undergoing a second major transformation in less than half a century.
The first, in the wake of the oil price booms in the 1970s, involved the introduction of free, comprehensive public healthcare.
Now, in an attempt to meet soaring demand, governments are encouraging the private sector to take on a larger share of the market.
Unprecedented population growth and a rise in chronic diseases due to more sedentary lifestyles are driving the escalation in healthcare demand, which is set to increase by 240 per cent within 20 years.
At a growth rate of 5 per cent a year, the GCC’s population of 35 million is on track to double over the next 20 years.
Mass immigration and a substantial decline in mortality rates are fuelling this population explosion.
Mainly because of these health reforms, the average life expectancy across the region has risen to 75 years from just 60 in the late 1970s.
Over the same period, infant mortality has dropped from an average of 70 deaths for every 1,000 births to about nine for every 1,000.
Meanwhile, the Gulf’s real estate and construction sector boom continues to attract expatriate workers to the region. In 2007, Dubai recorded a 6 per cent rise in outpatient and inpatient visits, with the largest increase in hospital attendance registered by non-Emiratis.
The sharp population growth is set to be accompanied by a shift in the demographic structure of the region over the next 20 years, as the currently youthful population ages.
The average age in the Gulf states ranges from 23 to 31, but for the foreseeable future, the fastest-growing age group will be over 65s .
This will add significantly to the strain on resources as, according to health experts, four-fifths of a person’s healthcare needs typically occur after the age of retirement.
Saudi Arabia predicts demand for hospital beds in the kingdom will rise from 50,000 to 70,000 by 2016, driven by an ageing and increasingly wealthy population seeking more specialist healthcare treatment.
But the biggest challenge facing the region’s healthcare providers is the predicted explosion in chronic diseases throughout the GCC.
The changes in eating habits and more sedentary lifestyles that have resulted from urbanisation and a rise in household incomes over the past couple of generations have exposed the region to what are know as ‘ailments of affluence’.
Coronary problems and other obesity-related diseases, which are commonplace in the West, were previously rare in the Middle East, but levels are soaring.
The statistics relating to diabetes are the most compelling, with rates set to triple by 2030. The UAE already has the second-highest prevalence of diabetes in the world, with about 20 per cent of the population diagnosed with type 2 diabetes and another 18 per cent at high risk of developing it.
In light of these new challenges, US management consultant McKinsey & Company forecasts that the total cost of healthcare delivery in the Gulf will increase to nearly $60bn by 2025, up from $12bn in 2007.
Treatment for cardiovascular disease is projected to become an enormous cost burden, eating up 24 per cent of total healthcare expenditure, compared with half that figure today, says McKinsey.
Although per capita expenditure on healthcare in the Middle East has been steadily climbing, spending is still dwarfed by that in Western countries, with GCC states devoting just 2-4 per cent of gross domestic product (GDP) to the sector in 2007, compared with an average of 8 per cent and 11.3 per cent of GDP in Europe and North America respectively.
Investment in the Gulf’s healthcare sector has fallen behind the development of the rest of the economy. Consequently, standards of treatment in some areas are already failing to match patients’ expectations, with increasing numbers of complaints over substandard service, equipment shortages and growing waiting times in state-funded hospitals.
The availability of doctors in the Gulf averages 17-27 per 10,000 people, compared with 32 per 10,000 people in Europe.
Billions of dollars worth of investment is needed to bring existing facilities up to scratch and to build new treatment centres to cope with increased patient numbers. In addition, new fields of medical expertise need to be developed in line with changing disease patterns and demand for better care.
Privately funded healthcare is not new to the Middle East. International hospitals are well represented throughout the region and there are networks of private clinics that mostly cater for expatriates and the wealthy.
But their share of the market is limited and healthcare provision in the Gulf remains heavily subsidised.
The private sector only accounts for 28 per cent of the total spent on health in Saudi Arabia, and as little as 15 per cent of the Omani market. Bahrain registers the highest rate of involvement, at more than 33 per cent.
To achieve the levels of funding and specialist treatment needed, governments are keen to increase private participation in the health sector, be it by buying equity stakes in health initiatives, developing new projects or managing existing public hospitals.
Saudi Arabia, for example, is considering privatising or outsourcing the management of more than 200 public hospitals.
To ease the burden on public coffers and guarantee demand for the private clinics, Saudi Arabia and the UAE have set up compulsory health insurance for expatriates. Countries such as Qatar are considering following suit.
Other incentives, such as interest-free loans and partnership schemes, are being promoted to make the sector more appealing for potential private investors.
The reforms are meeting with a positive response, especially in the UAE, where the healthcare sector is undergoing radical reform.
Private capital is funding about two-thirds of the new hospital capacity under construction in Dubai. The emirate has set about an ambitious hospital building programme, which will raise the number of available beds from just under 3,000 to more than 5,400 by 2010.
Only 400 of these new beds will come through the state-funded Jebel Ali Trauma & Emergency Centre, which is scheduled to open in 2009.
Changes in eating habits and more sedentary lifestyles have led to a rise in so-called ‘ailments of affluence’ in the Gulf.
QUOTE: Billions of dollars worth of investment is needed to bring existing facilities up to scratch
The private sector will, however, add nine new facilities between now and 2012, contributing 1,000 additional beds, a figure that will be matched by the flagship Dubai Healthcare City project, which is being developed by government-backed Tatweer.
As a result, the percentage of publically funded beds in Dubai will fall from 69 per cent of the total available in 2006 to 44 per cent by 2010. In comparison, the private sector’s share will jump from 31 per cent to 37 per cent, while Dubai Healthcare City will be responsible for 19 per cent of all beds.
The UAE is investing heavily in healthcare and not just to satisfy domestic demand. In a complete role reversal, the country that each year sends hundreds of its sick and elderly overseas for treatment is now aiming to position itself as a hub for medical tourism.
The emirates spend about $2bn a year on sending patients overseas for treatment that is unavailable back home. In 2007, Dubai sent 946 patients abroad for care at a total cost of AED178m ($48m).
Most were treated in Germany, with the others going to the UK, the US and India. Most of the consultations sought were in the fields of oncology, paediatrics and orthopaedics.
Jordan is the favoured Middle East destination for medical treatment and number four worldwide. According to the country’s Private Hospital Association (PHA), some 250,000 patients from 84 countries were treated at private hospitals, clinics and medical centres in Jordan last year, generating revenues in excess of $1bn.
The figure includes about 45,000 Iraqis and 50,000 patients from the West Bank, Gaza and Sudan combined. But Jordan does not just plug a gap left by the failing healthcare systems of its impoverished neighbours.
The country also attracts medical tourists from North America and the UK. According to the PHA, the cost of treatment in Jordan, even when combined with the cost of airline tickets and associated costs, can be a quarter of that for an equivalent procedure in the US.
The global health tourism sector is estimated to be worth as much as $100bn by 2015, up from current levels of $45bn.
Previously, the industry centred on affluent people travelling in search of innovative medical treatment, most often to the US.
But rising healthcare costs and lengthening waiting times are now the driving force behind the sector, with patients increasingly seeking treatment in middle and low-income countries.
The UAE is hoping to win a large slice of the health tourism market and is targeting visitors to the emirates to spend AED7bn a year on medical care by 2010.
The Abu Dhabi Chamber of Commerce & Industry suggests half of the 11.2 million tourists expected in 2010 will combine holidays with hospital treatment.
The country is already building up its tourism infrastructure by increasing the availability of hotel beds and improving transport. And it hopes that the partnership hospitals and clinics established with internationally recognised medical institutions, with ready-made reputations, will attract patients.
The possibility of being able to cash in on this industry is an added incentive for private entities to invest in the region’s healthcare sector.
But alarm bells are already being sounded by some industry observers who fear that the rise of for-profit establishments in the GCC will result in competition between public and private hospitals for high-value patients, leaving the state to treat the poor and costly long-term sick.
Critics say there is a danger that private hospitals could attract health professionals away from the public sector and rural areas.
There are also concerns that a fragmented system will lead to inefficiencies, higher costs and, potentially, deterioration in patient care.
To avoid such scenarios, Dubai recently announced the introduction of mobile clinics to service rural and isolated communities, removing the need to open fully equipped and fully staffed clinics in those areas.
The UAE Health Ministry is also in the process of implementing a new IT system in Dubai and the northern emirates, which will allow all state-run healthcare establishments immediate access to patients’ medical records.
Later on, it will be integrated with a similar system being introduced in Abu Dhabi, and there are plans to widen the scheme to include privately funded health centres. The system is expected to cut medical errors by up to 70 per cent.
Under proper regulation and rigorous supervision, however, the private sector will be able to revolutionise the quality of healthcare provision in the Gulf and broaden the scope of services on offer. So governments are right to court its involvement.
But the question remains of whether the region can draw highly skilled professionals to staff all the new facilities required.
The Gulf already relies heavily on foreign physicians, nurses and technical staff, and competition for their employment is growing worldwide.
Despite the region’s push to develop home-grown talent, there will still be a huge requirement for personnel from overseas, and with the rising cost of living in the Gulf, recruiting and retaining ancillary staff in particular could become problematic.
Ultimately, the true barometer of the region’s success in reforming its healthcare sector will be whether it can halt the flow of patients seeking treatment elsewhere.