Abu Dhabi: Lower oil prices and the resulting pressure on government expenditure present an opportunity for private health care providers to grow and cater to increasing demand.
According to Dr Howard Podolsky, chief executive officer of Cambridge Medical and Rehabilitation Center (CMRC), an Abu Dhabi-based health care provider, falling oil prices present an “excellent time” for private health care in the region.
“With market conditions changing and everybody caught in the dramatic fall in the price of oil, obviously, government expenditures are going to be constrained by these macro circumstances … this is an opportunity for private health care to step in with their areas of expertise and fill the voids and take over some of the responsibilities that the public sector was perhaps attempting to do in the past at a much higher cost,” he said.
The CEO said CMRC is already catering to a niche market of long-term care and post-acute rehabilitation, which is in short supply at public health care providers.
Unmet need
Podolsky said that CMRC has seen a steady increase in demand and an “unmet need,” though he said this might not be directly related to short supply in the public sector.
“Haad (Health Authority — Abu Dhabi) is looking at a very significant increase in growth in the health care sector and health care demand of over 20 per cent. It’s entirely possible [for us to see more than the 20 per cent Haad is predicting], and I think there will be more demand in the short run than supply, but as demand continues to grow, supply will catch up,” he said.
Expansion
Currently, CMRC is capitalising on higher demand with plans to expand its geographical footprint across the UAE and the overall GCC region.
In Abu Dhabi, where the business has a centre in Mafraq West and Al Ain, CMRC has a total of 180 beds. It plans to add another 45-60 beds at a new property adjacent to its existing one in the capital.
“We would certainly like to have our expansion in the next 12-18 months in Abu Dhabi because we’re getting to a capacity, and when we bump up to that wall, we want to be able to continue serving patients. Within the next 12-18 months, it would be ideal to have a footprint in Dubai as well but that all depends on market conditions,” Podolsky said.
CMRC is in “far advanced conversations” with landlords on property leasing and with the Dubai Health Authority and Dubai Healthcare City.
In the GCC region, CMRC is also eyeing Qatar and Saudi Arabia, and plans to open facilities there over the next 24 months. The CEO said that Saudi Arabia’s large population and increasing demand for long-term and rehabilitation provide a win-win opportunity for CMRC.
The company has recently acquired a licence to operate in Saudi Arabia and plans to be operational there in the next two years.
It is also “looking at selected opportunities” in the overall Middle East region, with Egypt being one of the potential markets. Podolsky said the expansion plans there were still in early stages and did not disclose further details.
Additionally, CMRC is considering expanding its services to include pain management, spinal care, geriatrics, and kidney dialysis.
TVM Capital
CMRC is owned by the Dubai-based venture capitalist, TVM Capital, which had stakes in ProVita, another health care provider. In mid-2015, TVM sold its stakes in ProVita to NMC Healthcare for around $161 million (Dh590.8 million).
Much like ProVita, CMRC is expected to be sold in the next two to three years, Podolsky said.
“As with venture capital, these are folks that seed companies, help them develop, create value in that process, and then they realise that value at some point in the future as they did with ProVita. I would expect they would do the same thing with their other companies including Cambridge,” he said.
Asked whether CMRC might be diluted instead of sold to another company, Podolsky said it was “certainly possible”, and that the board of directors was looking at “all options that make sense from a value-creation standpoint”. He said the decision was yet to be made, however.
