Having focused attention in recent years on developing its primary healthcare services, Oman is now preparing to launch several new hospital projects. Muscat’s eighth five-year national plan, covering 2011-15, which was ratified on 1 January, gives the Health Ministry the go-ahead to build two new regional referral hospitals and several smaller facilities.

The investment programme marks a return to hospital building after a decade spent concentrating on setting up a network of healthcare centres to be the first point of entry into the health system, as well as on improving mother and baby welfare. Compared with the previous five-year plan, the health sector has been allocated 84 per cent more funding.

Prioritising hospital investment in Oman

The regional referral centres will be built in the capital Muscat and in Salalah in the south of the country. The estimated cost of the Muscat facility is RO140m ($364m), while that in Salalah has been budgeted at RO48m. The two hospitals will have a combined total of 1,200 beds. The spending plan also makes provision for the construction of new local hospitals at Al-Suwaiq, Mahout, Sinaw, Dhalkut and Muzyunah, at a total investment of RO55.5m. In addition, RO10m has been allocated to upgrade the Samail hospital, along with RO8m for the construction of new health centres around the country. Polyclinics will also be built in Al-Kamil, Liwa, Mutrah and Nakhal at a cost of RO7.2m, while the polyclinic planned for Al-Muydhabi is expected to cost RO2m.

The Health Ministry is also considering ambitious plans for a medical city, which would combine several healthcare-related schemes, as has been done in Abu Dhabi, Dubai and Qatar. Funding for this has not yet been approved, but a source at the ministry says the idea is still under discussion and it could be added to the plan later, depending on the outcome of the talks.

Specific details of the eighth five-year plan for the health sector have yet to be released. The official says it is hoped the first draft will be ready within a month. Similarly, plans for a new Health Ministry headquarters to replace the existing building remain at the conceptual stage.

The approved projects represent a continuation of the government’s strategy of prioritising investment in the healthcare sector and other key areas of the economy in a structured and organised manner, as it has since the first national five-year plan was launched in 1976. This has enabled the sultanate to cut infant mortality rates and eradicate certain illnesses. Life expectancy has increased from 61.6 in 1985 to 72.7 today. Healthcare provision is now nearly universal, with some 98 per cent of nationals having free access to services.

Construction boom in Oman

Under the previous five-year plan for 2006-10, the Health Ministry opened 38 new health centres and one hospital. Another 17 new centres are nearing completion and four existing hospitals are being extended with the addition of new buildings. This includes construction of a 250-bed psychiatric hospital at Al-Amarat in the Muscat governorate, which is being carried out by the local Bahwan Contracting. The project is scheduled for completion in the second quarter of this year.

The Health Ministry is the main provider of healthcare services in the sultanate, but the expected wave of hospital construction over the next couple of years will not be confined to the public sector. Initial permits have been granted for the construction of nine new private hospitals around the country, with about 500 beds combined.

At present, the private health sector in Oman is severely underdeveloped. The government accounts for some 82 per cent of total healthcare expenditure, 98 per cent of inpatient services, and 96.6 per cent of hospital beds. The Health Ministry operates 203 primary healthcare facilities, including 31 local hospitals. Its secondary care hospitals number 19, with a combined offering of 4,006 beds. Some 4.1 per cent of the state budget for 2011 (about RO335m) has been allocated to the health sector.

Private healthcare in Oman

But the private sector is growing in large part due to incentives initiated in 1995 to encourage investment in specialist clinics through the use of soft loans and land allocations. The number of private diagnostic centres and clinics has more than doubled during the past 15 years, climbing from 471 in 1995 to 1,102 in 2010. Over the same period, the number of private hospital beds available has risen from six to 332, with the opening of six new hospitals. In 1995, there was just one private hospital in Oman.

The growth of the medical insurance sector is the primary reason that private providers are becoming more interested in investing in the sultanate. “This is encouraged by two things,” said Saif al-Nabhani, director of planning at Oman Health Ministry, at the MEED Healthcare Projects conference, held in Dubai in December. “We estimate about 30-40 per cent of private sector employees already have private medical insurance, and last year we did a study that concluded that insurance should be compulsory for all expatriate workers and their families. This is going through approval now and if that happens a lot of these private hospitals will thrive.” It is estimated that there are some 500,000 expatriates working in Oman.

As has been seen elsewhere in the GCC, the introduction of mandatory insurance drives up demand for healthcare services, particularly at the primary level, offering clear business opportunities for private healthcare providers.

Private players are positioning themselves to capitalise on this growth. Dubai-based DM Healthcare, for example, has pledged to invest nearly $26m in new hospitals and medical centres in Oman during 2010-15. Having entered the market in 2009, the firm already operates two hospitals in Muscat and Sohar, under its Aster brand. DM Healthcare also has four medical centres and four pharmacies in Oman. Other private hospitals include the 78-bed Muscat Private Hospital, which was opened in Bausher in November 2000 and is managed by Allied Medical, part of the international hospital management company, UME Group.

Healthcare growth potential

Regional spend on healthcare is still comparatively low, at no more than 4 per cent of gross domestic product (GDP) – half the European average of 8 per cent of GDP. So the potential for the private sector to grow is immense. But the unique geography of the sultanate means state-provided healthcare services will continue to dominate, at least in the medium term, due to the scattered nature of the country’s many rural communities.