Dubai: Mandatory medical insurance for all will have a quantitative — and qualitative — impact on the Dubai health care sector, as is already the case in Abu Dhabi. It would also go a long way in justifying the substantial commitments the private sector has made on creating new capacities in health care provisioning in the emirate.
The market hopes that some details of the shape of the proposed medical insurance reforms for Dubai will be revealed next year. Such a transition to compulsory medical insurance for all would also be an incentive for the sizable expatriate base to seek treatment in-country rather than in their own country of origin.
"The gradual improvement of health care infrastructure and standards in the GCC along with increasing insurance penetration should see an increase in the number of patients opting for treatment locally, thus seeing an increase in demand for hospital beds," says a report by Alpen Capital.
"Health insurance coverage is likely to expand over the next few years as the GCC governments mandate health insurance, giving a further boost to the health care sector in the region."
The UAE's health care market could be looking at a compounded annual growth rate (CAGR) of 12.1 per cent to $8 billion by 2015 from an estimated $4.5 billion in 2010. It would be on the back of the $5.7 billion worth of related projects that have been announced or are in progress in the country.
The outpatient market is likely to be worth $6 billion and inpatient would be $2 billion, according to the projections by Alpen Capital.
But there will be consolidation among the existing operators. "I think some of the smaller independent clinics will consolidate as the costs and the bare minimum standards expected of such facilities go up," said Mark Adams of Gulf Healthcare International.
"Health care providers must adapt to the transition from cash transactions to payments by insurance providers," said the Alpen report. "Health care costs have been growing significantly over the past six years; however, most of this cost was borne by patients or governments. The onus would now fall on health care providers as the pay cycle of health insurance receivables to these organisations generally runs into months.
"This may cause a liquidity crunch for organisations and could stall their expansion plans."
Saudi Arabia: galloping growth
A mixture of government and private sector investments will propel Saudi Arabia's health care sector to growth rates of 12.3 per cent up to 2015 and a value of $25.7 billion (Dh94.38 billion). This would compare with the $14.4 billion at the end of the last decade. To set the pace, an outlay of $8.6 billion is being pumped into hospital projects across the kingdom.
"The growth would be mainly driven by population explosion — population in the largest of six GCC countries is likely to increase by 3 million over the next five years — and improving life expectancy," said the Alpen Capital report.
"The outpatient market is estimated at $22 billion, while the remaining would be contributed by the inpatient market. Given the strong demand for health care services, we believe the number of beds in Saudi Arabia is expected to expand at a CAGR [compounded annual growth rate] of 2 per cent to 63,930 in 2015 from an estimated 57,994 in 2010.
"The government has been aggressively implementing policies to build infrastructure and enhance private sector participation due to rising demand for health care services," the report added.
"Saudi Arabia is also promoting private sector investment by offering soft loans over a longer tenor."
Meanwhile, in Qatar and Bahrain the incentives for the private sector take the form of guaranteeing minimum cost coverage. This translates into reimbursements of the cost of a minimum number of patient visits to the private hospitals even if the numbers are not met.
