Medical treatment in the Middle East

10 October 2010

Historically, Middle East nationals have gone abroad for medical treatment. Now, regional governments are targeting inbound medical tourism, but should they try to compete with established destinations?

Medical tourism in numbers

$40bn: Industry value worldwide

35 per cent: Average annual growth

$5,000 a trip: Average spend a patient

$2bn a year: Outbound UAE health tourism

Source: MEED/Medical Tourism Association, 2010

Analysts say medical tourism – overseas travel for specialist and elective health treatment – is set to see an explosion in global demand. Conservative estimates value the industry at $40bn worldwide, with an average annual growth of 35 per cent poised to raise spending to $60bn within the decade.

Jordan has brought together government, the medical industry and key tourism bodies to promote itself

Dr Prem Jagyasi, ExHealth

Rising healthcare costs and lengthening waiting lists in North America and Europe are driving demand for treatment overseas. For patients and their insurance companies, developing countries offer a cheap, viable alternative.

Since the 1970s, GCC governments have paid for citizens to undergo medical treatment overseas. Families would build their annual holiday around a relative’s all-expenses-paid treatment in Europe, Asia or North America. Since the 11 September attacks, fewer Arab patients travel to Europe and the US, turning instead to regional or Asian destinations.

The key is local training, importing staff makes the UAE five or 10 times more expensive than Thailand

Hisham Farouk, Grant Thornton

New destinations include India, Thailand, Malaysia and Singapore. India offers treatments for a tenth of the price of the US or UK, and annual medical tourism earnings are forecast to rise by 30 per cent to more than $2bn by 2012.

Medical tourism: Starting small in the UAE

Medical tourism is lucrative for destination countries, with an average spend of $5,000 a patient a trip, according to the Medical Tourism Association (MTA). But for countries of origin, medical tourism drains resources. In 2008, 200,000 Saudis travelled abroad for treatment. The UAE spends more than $2bn a year on nationals’ overseas healthcare.

Now, however, GCC governments see an opportunity to target inbound medical tourism. It has started small: industry sources put earnings from inbound medical tourism in the Middle East and North Africa at less than $2.5bn a year. But revenues will increase as insurance companies form partnerships and extend cover to expat policy holders in the region’s private hospitals. Medical cover is key to expatriate remuneration packages, and it makes sense to opt for accredited local hospitals, rather than fly sick employees abroad.

JCI-accredited bodies in the Middle East (percentage)
Saudi Arabia3333
Source: JCI

This will become more commonplace as GCC hospitals and clinics achieve the international accreditation that global insurance firms demand. Regional hospitals will have to offer proven standards based on transparency of data; areas in which, historically, regional healthcare providers have fallen short.

Accreditation has a long way to go, however. Market-leading industry body Joint Commission International (JCI) has accredited just 89 healthcare bodies in the Arab world.

Jordan is the Middle East’s leading medical tourism destination, earning more than $1bn a year. The World Bank ranks Jordan fifth worldwide, attracting patients from the GCC, Iraq, Sudan, Libya and Yemen. Private Hospitals Association figures show that Jordan treated 220,000 foreign patients in 2009, representing annual growth of 10 per cent.

Its strengths include a large base of healthcare professionals, many trained at world-class overseas medical schools. This is an advantage shared by Egypt and Tunisia – but something that most GCC countries with their smaller populations uniformly lack.

Jordanian hospitals offer everything from cardiac surgery and kidney transplants to specialist Dead Sea skincare. Now, Jordan is targeting the US market and its Arab diaspora. For US patients, Jordan provides world-class treatment for a quarter of the price back home.

Combined effort to market Jordan as a healthcare destination

Jordan owes its success to joined-up thinking, according to Dr Prem Jagyasi, medical consultant and CEO of ExHealth in Dubai Healthcare City. “Jordan has brought together government, the medical industry and key tourism bodies to promote itself as a destination,” he says. “It is essential for countries to approach medical tourism through this kind of combined effort.”

Other established regional destinations include Egypt, which attracts medical tourists from sub-Saharan Africa, and Tunisia, which draws patients from across Africa, the Mediterranean and France for cut-price cosmetic surgery and dental work.

But the established regional players face new competition from the GCC states, which have invested heavily in healthcare in the past decade. Dubai, Abu Dhabi, Bahrain and Qatar all hope to attract overseas patients. All aim to attract inbound investment from global healthcare bodies.

Already, the initiative has had some success. Dubai has developed Dubai Healthcare City (DHCC), offering financial incentives to attract inbound healthcare investment. DHCC bodies treated 220,000 patients last year, up from 90,000 in 2008.

DHCC chief executive Dr Ayesha Al-Abdullah expects to introduce 10 new clinics this year. Harvard Medical International will open a medical school on site next year. Abu Dhabi has attracted John Hopkins Medicine and the Cleveland Clinic. Weill Cornell Medical College has set up a campus-based medical school in Doha, in partnership with the Qatar Foundation.

In March, Bahrain gained Accreditation Canada certification for two hospitals and 22 primary healthcare clinics, as part of the Vision 2030 drive to develop medical tourism. Ithmaar Development Company is building Dilmunia, a $1.6bn offshore medical resort.

But DHCC has seen investor interest slow. The prestigious Mayo Clinic has closed its DHCC clinical practice, having struggled to attract patients. Analysts say Dubai cannot compete against Asian destinations’ cheaper hotel accommodation and treatment packages.

Comparative pricing for operations

Consultancy Grant Thornton says patients pay $44,000 for a heart bypass operation in the UAE. The same operation costs $18,500 in Singapore, $11,000 in Thailand, $10,000 in India and just $9,000 in Malaysia.

GCC countries will not gain market share from Asian medical tourism destinations unless they charge competitive prices for treatment and attract quality medical staff, says Rose Ann Shetty, chief executive of specialist Dubai tour operator Galavantor.

“At the very least, they should be priced on par with Singapore, comparatively the most expensive [destination] in Asia,” she says.

MTA president Renee-Marie Stephano says patients require three essential factors from their chosen destination: access – how quickly they can be treated; availability – is the treatment socially acceptable; and value for money.

“It is a challenge for Gulf countries to offer affordable treatment,” says Stephano. “The need to bring in specialist physicians increases costs … It may always be more affordable for countries such as Dubai and Abu Dhabi to send patients overseas for the most specialist medical treatment than to incentivise foreign doctors to bring specialist knowledge in.”

Jagyasi is more optimistic about GCC prospects for inbound health tourism. Saudi Arabia is already a successful – though relatively little-known – medical tourism destination, he says. Pilgrims combine a visit for Hajj and Umrah with medical treatment, spending more than SR400m ($107m) in 2007.

Hisham Farouk, UAE country manager for Grant Thornton, urges GCC countries to adopt a ground-up approach to healthcare, rather than parachute in expertise that does not match healthcare needs. For GCC countries to succeed, they need to have “the whole package ready at the right time,” he argues.

That means access to local doctors, nurses and administrators, equipment to meet local demand, the right clinical infrastructure and support for research and development. GCC countries’ demographic make-up means it can be difficult to determine healthcare needs; at times, Dubai companies have seen a 30-40 per cent annual turnover in staff.

DHCC has evolved from its original remit, says Farouk. “Its clinics and specialist doctors are now set up with a local market of recurring patients in mind – it’s been an organic process,” he says. “This is reflected in the size of the clinics, and in the research and complementary medical centres that have taken up real estate there.

“Next year’s opening of Harvard Medical School will be very significant. The key is local training, because the cost of importing staff makes the UAE five or 10 times more expensive than Thailand … It’s about taking a ground-up approach, rather than countries replicating their neighbours.”

GCC states must also address issues of cost, access and safety. In particular, Arab healthcare bodies need world-class accreditation to persuade nationals to choose local hospitals over foreign ones before going on to target paying foreign visitors.

Building trust is critical. In May 2008, an Emirati woman died after undergoing liposuction surgery at a clinic in Dubai. The Ministry of Health moved quickly, shutting down several clinics and revoking doctors’ licences in a drive to toughen up industry regulation.

The Centre for Healthcare and Quality Planning (CPQ) has given DHCC hospitals and clinics two years to attain JCI accreditation.

“Accreditation was pioneered in Saudi Arabia by Aramco,” says Dr Ashraf Ismail, JCI managing director Middle East. “For insurance purposes, Aramco pressed private Saudi hospitals to seek accreditation, and that led to a rush in applications across the kingdom … Now the trend is growing across the region.

“It grows in a logarithmic way: the more bodies that achieve accreditation, the more awareness there is of the benefits.”

Jordan’s Private Hospitals Association is working with the Usaid Jordan Economic Development Programme to promote service-oriented culture in the kingdom’s hospitals. Centred on staff training, the initiative supports the kingdom’s drive to increase its base of JCI-accredited hospitals from six to 16.

Global downturn for medical procedures

Medical tourism is not recession-proof. Although the global downturn has persuaded insurance companies to fund cheaper treatment in developing countries, Stephano says last year saw a global slump in demand for non-essential procedures such as plastic surgery, spa treatments and dental work.

Stephano agrees with Farouk that GCC states must focus on sustainable healthcare. Governments that invest in primary, secondary and tertiary healthcare will stem the outbound flow of patients, building their credibility among expat workers and then overseas patients.

“The MTA is excited about the potential in the Middle East,” says Stephano. “While governments may be less able now to invest in such medical projects alone, we see new opportunities for public-private partnerships, particularly for investment in health infrastructure. What the region needs is investment in education programmes that encourage sustainability. We want to see growth in local patients using the new healthcare facilities, rather than projects built for foreign patients that then lie empty.

“It is crucial for governments to educate the local population to use the Gulf’s new healthcare services. In India, for example, there are serious questions over the way investment in healthcare has priced treatment beyond the reach of the local population. The Gulf countries must target their own populations first.”

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