Private sector drives Gulf healthcare

06 November 2008
Gulf states are seeking international help to increase capacity at public and private hospitals.

To prepare for a rapidly growing and ageing population, as well as a predicted epidemic of chronic diseases such as diabetes, the GCC countries are set to embark on an unprecedented capacity building programme. The most populous GCC state, Saudi Arabia, expects demand for hospital beds in the kingdom to rise 40 per cent, to 70,000 by 2016, from 50,000.

Hospitals and specialist clinics carrying the names of internationally renowned medical institutions are appearing across the region. In most cases, they are the product of partnerships with public health authorities or government-backed investment funds, made possible by offering attractive financial incentives to established institutions.

The number of hospital beds planned for Dubai Healthcare City1,830
The physical size of phase two of Dubai Healthcare City19 million sq ft
The Qatar Foundation’s investment in the Sidra Medical and Research Centre$7.9bn

Mubadala Healthcare, a division of the government-owned investment vehicle Mubadala Development Company, is key to the expansion of healthcare provision in Abu Dhabi, where bed capacity is expected to more than double to 7,500 by 2015, from the current 3,500.

Mubadala is setting up a health system for the emirate, comprising family clinics, speciality treatment centres, general and multi-speciality tertiary care hospitals, and ancillary services, such as testing laboratories. “Abu Dhabi and the UAE are growing at a tremendous rate and healthcare provision has not kept pace with that growth,” says Mark Erhart, executive director of Mubadala Healthcare.

“As a result, many patients are going abroad for treatment, particularly for orthopedics, cardiology and neurology, and also for general health-screening and rehabilitation.”

Mubadala is building its network using long-term clinical operating partnerships with international healthcare institutions, which establish and manage the facilities. It has set up two specialist clinics: the Imperial College London Diabetes Centre and the Abu Dhabi Knee & Sports Medicine Centre, which both opened in 2006.

Its first hospital, the 360-bed Cleveland Clinic Abu Dhabi is expected to start operations in early 2011. In September, Mubadala also announced plans to establish a spine centre in the emirate in partnership with South Korea’s Wooridul Spine Hospital. The various medical centres will be integrated through a common IT system, allowing doctors access to an electronic patient record system and facilitating referrals between establishments.

In Dubai, the largest healthcare project is being developed by Tatweer, a subsidiary of state-owned Dubai Holding, based on affiliations with international institutions. It is setting up a medical free-zone, Dubai Healthcare City (DHCC), which comprises two distinct phases, the medical community, focusing on acute care, and the wellness community with outpatient clinics and health resorts.

The project includes the construction of a university hospital, the Harvard Medical School Dubai and the Boston University Dental Health Centre. The 400-bed university hospital will function as the city’s main tertiary-care facility when it opens in 2011. To date, Tatweer has invested a total of AED12.5bn ($3.5bn) into DHCC, with partner institutions contributing a further AED15bn.

In Qatar, the non-profit state-funded organisation Qatar Foundation is leading the revolution in healthcare. As part of Doha’s push to transform the country into a knowledge-based society, the Qatar Foundation is building an education city, which includes the Sidra Medical and Research Centre and Weill Cornell Medical School.

Sidra, which is being set up with a $7.9bn endowment from the foundation, will initially house 412 beds, with the possibility to expand this to 550. The hospital will focus on obstetrics and gynaecology, and paediatrics, and it will include a speciality-care centre for women. It will employ more than 4,000 clinicians, technologists, biomedical researchers and support staff, when it opens in November 2011.

The Qatar Foundation invited Weill Cornell Medical School to set up in Education City in 2001, and the foundation retains ownership and responsibility for all infrastructure connected to the medical school. In May this year, the first students graduated from Weill Cornell.

The main teaching hospitals when completed, will be Sidra and the QR3.2bn ($800m) Hamad Medical City, being built by Hamad Medical Corporation.

Hamad Medical Corporation is the main provider of public healthcare in Qatar, responsible for more than 80 per cent of health services. The three hospitals are being built at the new Hamad Medical City, which combined will contribute 1,100 additional beds by 2010. The city will provide paediatric, trauma and orthopedic care, as well as a nursing home for the elderly and a renal dialysis unit.

Bahrain, meanwhile, is developing its healthcare sector and is aiming to tap into the lucrative health tourism industry. It is setting up a Health Oasis, a mixed-use waterfront development integrated within a wider healthcare site on the island of Muharraq, which will be home to the King Hamad General Hospital (KHGH) and the Royal College of Surgeons in Ireland (RCSI), and the Medical University of Bahrain.

Scheduled to open in 2010, KHGH is one of the biggest public sector health projects in Bahrain of recent times and it will provide 312 beds. It will be operated by RCSI and will be the main teaching hospital for the adjacent university.

In their vision for the future, the region’s health authorities see their role evolving from provider to regulator, with the private sector
taking on greater responsibility for healthcare provision and delivering the much-needed additional hospital beds and the improvements in the scope and quality of healthcare offered.

At the heart of the restructuring of healthcare in the region, are plans to shift towards a continuing care model, in which a network of primary care healthcare clinics become the first facility patients visit, allowing hospitals to provide acute and specialist care.

The American Hospital Dubai announced plans this summer to open five primary healthcare clinics, at the same time as expanding the hospital to accommodate 60 new beds.

The hospital will also move from being a secondary-care hospital to a tertiary-care facility. Secondary and primary care options will also be available.

Emaar Healthcare Group, a division of Dubai-based Emaar Properties plans to build an AED18.35bn ($4.9bn) portfolio of clinics in Dubai and the Middle East, and in North Africa, in partnership with the US’ Methodist International, the international subsidiary of the Methodist Hospital in Houston, Texas.

Ithmaar Development Company, meanwhile, plans to create a network of 21 outpatient medical centres across the GCC: with one in Bahrain and Qatar, two in Kuwait and Oman, nine in Saudi Arabia and six in the UAE. The clinics are expected to provide a steady stream of referrals for Health island, a $1.6bn resort dedicated to medical tourism that is being developed off the northeast coast of Bahrain. The man-made island will include a 358-bed hospital, a 216-bed hospital for women and children and specialist clinics. International medical institutions will be brought in to operate the facilities.

Private investors are also building up portfolios in ancillary areas of the health sector.Abraaj Capital, for example, has bought a 40 per cent stake in Tadawi Group, the largest Saudi pharmaceuticals wholesaler and retailer.

It also owns stakes in Egyptian medical laboratory company, Al-Borg and Acibadem, a Turkish hospital operator, as well as a 50 per cent shareholding in Turkish health insurance company, Acibadem Sigorta.

Saudi Arabia is also considering privatising or outsourcing the management of more than 200 public hospitals. A group of investors including Saudi Healthcare Investment Company, The World Bank and GE Healthcare, has set up a $100m Sharia-compliant private equity healthcare fund to capitalise on these types of opportunities, which provide financial bonuses when targets set for clinical performance or care standards are met or exceeded.

The restructuring of the health systems in the GCC is in its early phase, and the regulatory framework needed to support fully-fledged private sector involvement is still taking shape. But once robust private health insurance financial management systems are in place, enabling private and public hospitals and specialist treatment centres to compete on an equal footing, investment is sure to follow.

The danger is, however, that by then the international institutions brought in under favourable long-term operating licences, may already have won patient loyalty.

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