Health Care Sector in the Gulf Cooperation Council Countries
The GCC region is poised for an unprecedented surge in healthcare consumption driven by robust population growth and rising income levels. Higher income levels and sedentary life styles have led to poor health conditions, a phenomenon that has been witnessed in most developed economies.
Healthcare spending in the GCC region recovered sharply in 2011 after a flattish 2010 to reach US$ 41.6 billion, implying a five year CAGR of 14%. This figure is pegged to grow substantially supported by higher insurance penetration, rising population and lifestyle related diseases.
GCC healthcare spend per capita is lower compared to developed peers, further underscoring the potential growth for the industry. Healthcare infrastructure is relatively underdeveloped compared to developed countries with physician density of 1.5 per 1,000 people while hospital beds lag at 21 per 10,000 people.
The governments, which play the predominant role in healthcare services, are taking steps to ensure continuous development of infrastructure through nurturing management skills, increasing the share of private sector and utilizing IT skills to spread the reach and range of healthcare services.
Alpen Capital estimates that the GCC healthcare market is projected to grow at 12.0% p.a. to US$ 69.4 billion by 2018 from an estimated US$ 39.4 billion in 2013. Outpatient and inpatient markets are expected to account for 79% and 21%, respectively, of the overall market size.
Saudi Arabia is projected to remain the largest GCC market. Qatar and UAE are expected to be the fastest growing markets, going forward.
The demand for number of hospital beds is expected to be 115,544 in 2018, an addition of 11,241 beds from 2013, which is in line with the expected supply looking at the number of projects in the pipeline.
Key Drivers of the Health Care Sector in the GCC countries
- The IMF estimates that the region’s population would cross the 50 million mark by 2020, providing impetus to the consumption of healthcare services.
- Rising income levels and sedentary lifestyles have led to a higher prevalence of obesity and diabetes leading to a demand for specialized healthcare services.
- GCC population in the age group of 65 and above is expected to surge from 1.2 million in 2015 to 14.2 million in 2050, driving demand for healthcare services.
Augmented by higher life expectancy, which stood at 76.4 years in 2011 against 69.8 and 69.0 for the Arab and BRIC regions, respectively. Also, infant mortality in the GCC improved from 110 per 10,000 live births in 2000 to 78 in 2012
- While growth in the region’s insurance premium outpaces the growth in the global market, the insurance penetration remains one of the lowest in the world.
- The region is building large medical cities and complexes, with billions of dollars of investments lined up, to not only raise the supply of medical infrastructure but also raise the quality of healthcare services in the region.
Key Trends of the Health Care Sector in the GCC countries
- Employee healthcare benefits cost in the GCC is highest in the EMEA region. Middle Eastern employers spend more on healthcare than their other EMEA counterparts (6.1% compared to 3.9%)
- The GCC countries, especially the UAE and Qatar, have one of the highest growth rates of healthcare costs due to the advent of new medical technologies and longer length of stay, along with better healthcare facilities
- PPP models in the GCC continue to be adopted, but are at an early stage.
- UAE‘s medical tourism sector is growing strongly and reached US$ 1.69 billion in 2013 from US$ 1.58 billion in 2012. Dubai Healthcare City (DHCC) is one of the largest healthcare tourist destinations in the region. According to DHCC, they handled around 500,000 patients in 2011, 20% of which were medical tourists.
- New technologies such as e-health services are being increasingly adopted to lower healthcare costs in the region, besides improving the quality of services.
- Healthcare IT expenditure in the GCC region is estimated to increase from US$ 444 million in 2011 to US$ 551 million by 2015.
- Inbound medical tourism to grow driven by high quality health infrastructure
- Specialist hospitals have been launched, such as the Sidra Medical and Research Center, Al Jalila Children‘s Specialty Hospital, etc. to stem the outflow of seeking specialist treatments abroad
- Wellness and cosmetic care centers are on the rise.
- Upcoming trends in the sector are adoption of an asset light model, smaller hospital set-ups and encouraging usage of quality local medical treatment.
- Challenges of the Health Care Sector in the GCC countries
- The GCC countries are predominantly dependent on governments for financing healthcare expenditure. With rising healthcare costs, it is imperative for the government to increase private participation.
- Quality of healthcare is still not at par with that in the developed countries due to which patients travel abroad, especially for complex treatments.
- Due to insufficient medical practitioners present within their countries, the region is reliant on foreign professionals for meeting the rising demand.
- Clear guidelines pertaining to minimum quality standards are needed.
- The GCC region had a low average insurance penetration level of just 1.1% in 2012, compared to the global average of 6.5%, lagging behind on other key insurance parameters as well.
Published By Mohammad Ghanem/ BIOSERVPRO STUDY
5 October 2016